Borrower Bill of Rights Would Provide Oversight of Loan Servicers
St. Paul, MN — A student debt crisis of epic proportions is causing stress and strain for Minnesotans who are struggling to repay their loans and putting off other bills, according to a Morning Consult survey commissioned by the Center for Responsible Lending (CRL) and Education Minnesota (EDMN).
Three-quarters of respondents report stress from their student loans, and results indicate that student loan servicers are not providing crucial information to help borrowers manage their payments.
The poll comes as Minnesota lawmakers consider the Student Borrower Bill of Rights, which would provide oversight over student loan servicers and hold them accountable for serving borrowers fairly and responsibly. Problems with servicers include misleading information, misapplied payments, and failure to place borrowers in the income-driven repayment plans for which they are eligible, which adds to their debt load and makes covering living expenses more challenging.
Black and Latino students struggle to fund their college experiences due to broad societal discrimination, and they are targeted by poor quality for-profit institutions that fail to provide reliable educational benefits. As a result, students of color accumulate high levels of unmanageable debt. Almost half of Black graduates owe more on their undergraduate student loans four years after graduation than they did when they received their degree, compared to 17% of white graduates.
“College affordability and education debt are no longer just a burden — they have become a barrier to the American Dream. And loan servicers are part of the problem,” said Vice President of Education Minnesota Bernie Burnham. “Borrowers in low-wealth, rural and communities of color are harmed the most. This poll shows strong support for bold solutions, and one clear need is holding servicers accountable through the Student Loan Borrower Bill of Rights.”
The vast majority of poll respondents support major reform across party lines, with 79% supporting an office to take student loan complaints and advocate for borrowers. Fourteen other states have taken up student loan servicing reform in recent years, with many passing strong reforms that oversee servicer conduct and provide a student advocate position.
“Across the nation, states are stepping up to address a crisis that has been too long ignored, littering the path to financial security and prosperity with too many obstacles,” said CRL Senior Policy Counsel Yasmin Farahi. “We need reforms that right those wrongs and restore the promise of higher education for all students.”
Respondents to the January-February survey also reported:
- One in three Minnesota borrowers are not confident they will be able to resume payments paused by federal legislation during the COVID crisis.
- 59% of borrowers report they would have trouble paying for an unexpected expense or are already falling behind in their finances.
- Borrowers report they have delayed saving for retirement (50%), put off buying a home (29%), been unable to buy basic necessities (26%), put off starting a family (20%), or have gone without medical care (17%) in order to pay their student loans.