PROVIDENCE, RI — A bill sponsored by Warwick state Rep. Joseph McNamara to protect student loan borrowers has become law.
The law, which also establishes oversight of student loan servicers operating in Rhode Island, was backed by General Treasurer Seth Magaziner and Attorney General Peter F. Neronha, and took effect when it was signed by the governor on July 15.
“By several measures, student loan debt has increased greatly in the last 10 years,” said McNamara (D-Dist. 19), chairman of the House Committee on Health, Education and Welfare, in a General Assembly press release. “It has surpassed the amount households owe on auto loans, home equity loans and credit cards. This legislation will help to address the crisis by establishing oversight of the student loan process and prohibiting predatory practices.”
The legislation, titled the Student Loan Bill of Rights, requires that student loan servicers register with the state and allows state regulators to examine servicers’ business practices. Under the new law, the attorney general and state Department of Business Regulation can penalize servicers who violate borrower rights, and seek restitution on behalf of borrowers in Rhode Island.
According to the press release, borrowers have reported being double-charged or incorrectly marked as delinquent in payment, with loan servicers taking months or even years to correct those mistakes. Many student loan borrowers who are eligible for the national Public Service Loan Forgiveness program have also received incorrect and contradictory information from their loan servicers, leading to improper denials of loan forgiveness.
More than 133,000 Rhode Islanders, among them 16,000 senior citizens, have a combined $4.5 billion in student loan debt, the General Assembly press release noted. Over $470 million of Rhode Islanders’ student loan debt is delinquent.
Companion bills for the new law passed the state House and Senate in June.