Washington AG Wants More Regulation for Student Loan Servicers
Washington State Attorney General Bob Ferguson, right, seen here speaking with Rep. Norm Johnson, center.
A recent report shows that over 800,000 Washington residents owe more than $24 billion in student loan debt. This report closely details the struggles that many borrowers face as they attempt to pay off their loans.
Using this report as a centerpiece, Attorney General Bob Ferguson called for new legislation to protect borrowers from predatory practices by student loan servicers. This bill would give the state of Washington the ability to license and regulate student loan servicers. Ferguson requested a similar bill last year, but it never made it past the Senate.
The bill would require student loan servicers to inform borrowers of all of their repayment options, including income-driven repayment plans. It would also provide a student loan advocate who would be responsible for responding to borrower complaints and helping them find helpful resources.
Overall, it would have called for greater accountability in the student loan space, starting with student loan servicers. Borrowers would have had access to outlined and clear loan repayment expectations earlier in the process.
The moves by the Washington Attorney General were sparked by a report that was previously mentioned. Several details in this report point towards issues with student loan borrowers.
Ferguson outlined a number of details he found troubling in the report. For instance, the number of borrowers in the state of Washington has increased by 35 percent in the past 10 years. And at the same time, tuition at both public and private universities has increased dramatically.
The report also looked at the role that gender and socioeconomic status play in student loan debt. Women account for two-thirds of the outstanding student loan debt. Additionally, students who come from low-income families are more likely to need to take out loans to pay for college; they are also twice as likely to default on their loans.
At graduation, black students owe $7,000 more in student loan debt than their white person average. And while Hispanic graduates have roughly the same amount of debt as their white peers, they are twice as likely to default on their loans.
The number of students attending for-profit colleges grew in the past ten years. On average, students who attend for-profit colleges have to take out higher-volume loans; they are also more likely to default on those loans.
This is not the first time Ferguson has taken action to protect consumers from predatory student loan servicers. Earlier this year, he joined forces with the Illinois attorney general to sue the student loan servicer Navient for allegedly pushing borrowers into high-interest loans they had difficulty repaying. And Ferguson, along with other attorney generals, sued Secretary of Education Betsy DeVos for postponing the borrower defense rule.
If student loan debt continues to increase at this same rate, Ferguson is concerned about what the long-term repercussions could be, adding that the “…impact could be profound for our state and our country if this trend continues.”
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