Representative Zack Stephenson, R-Coon Rapids, and Senator Zach Duckworth, R-Lakeville, on Monday, February 22, put in place a plan to require student loan officers to be licensed by the state. Repairers would face civil penalties and revocation of their license if they mislead borrowers or distort their services.
The couple said their so-called “Student Borrower Bill of Rights” could add extra teeth to state law to deter companies from entering into loan deals with Minnesotans and then shifting the stakes onto them. without their approval. In Minnesota, approximately 775,000 residents have student loan debt. And combined, the loans total $ 27 billion.
Under the proposal, service officers would be required to apply for a license through the Ministry of Commerce and would be prohibited from deceiving borrowers, distorting their services, or inappropriately applying loan repayments to stay in business. rule with the state. It does not describe a clear recourse for the borrower.
“Minnesota law is surprisingly inadequate to protect student borrowers from even the most basic bad behavior of private companies that service their debt,” Stephenson said. “If the borrower takes the slightest misstep, he can see his debt spiral out of control and suddenly become ineligible for the rebate programs he may have planned his entire education on. “
This is what happened to Destiny Belmont, a school psychologist from the Benton-Stearns Education District. Belmont took out about $ 50,000 in loans to help pay for his graduate studies at Minnesota State University Moorhead. His loan officers then changed his policies without telling him and complicated his efforts to have his debts canceled by the federal government after nearly a decade of repayment.
“Loan officers take advantage of the people of Minnesota, many of whom – like me – go into education, health care and other public services, ”Belmont said. “It’s time to regulate lending services and represent the interests of borrowers, not corporations. “
The bill was due to be submitted to its first committee hearing on Tuesday. The Senate and House of Representatives will need to approve the plan before it can travel to Gov. Tim Walz’s office for signature.
Stephenson and Duckworth said they were confident the measure could win support on both sides of the political aisle on Capitol Hill.
“Slowly but surely, hopefully we can have a more lasting impact on this process,” Duckworth said. “I think that’s a good place to start.”