LANSING — Today, Democratic legislators in the Michigan House and Senate introduced a package of three bills that would protect student borrowers and people currently repaying student loans from predatory lenders.
“Getting an excellent education is no longer optional if a young person hopes to compete for the most promising careers available, and for many, that means going to a two-year college or university,” said state Representative Winnie Brinks (D-Grand Rapids). “As the mother of one daughter already in college and two others nearing college age, I know that the soaring cost of obtaining that education is putting it out of reach for too many young people, while others have to take out tens of thousands of dollars in loans just to get a degree. We can’t afford to price our promising students out of a good future any longer.”
Rep. Brinks’ bill, House Bill 5585, would require student loan servicers to be licensed by the state and operate under strict guidelines. Other bills in the package would reinstate the Michigan Higher Education Assistance Authority (MHEAA) and create a Student Loan Ombudsman and Student Loan Bill of Rights. Currently, servicers can pressure students with fines or denial of service if they fail to open specific types of bank accounts, maintain an account balance or purchase bank products — all of which are unnecessary to pay back a loan.
“Students should be able to benefit from consumer protection laws, just like anyone else,” Brinks said. “Unfortunately, students are often younger and have less real-world experience, which makes it easier for banks and lending institutions to take advantage of them. We owe it to our young people to protect them from these kinds of financial abuses.”
The legislation would:
- Create a Student Loan Ombudsman and Student Loan Bill of Rights, sponsored by Sen. Rebekah Warren (D-Ann Arbor) and Rep. Henry Yanez (D-Sterling Heights).
- Add a student loan servicer licensing requirement, sponsored by Sen. Coleman A. Young II (D-Detroit) and Rep. Brinks.
- Reinstate the MHEAA, sponsored by Sen. David Knezek (D-Dearborn Heights) and Rep. Charles Brunner (D-Bay City), which was dissolved in 2006.
Similar legislation was passed in Connecticut last year. Other states are considering related measures to address the $1.3 trillion in student loan debt standing between students and their futures.