McNamara legislation would create student loan ombudsman

Posted 1/14/16

Rep. Joseph M. McNamara (D-Dist. 19, Warwick, Cranston) has introduced legislation that would establish a Student Loan Bill of Rights in Rhode Island.

The proposed legislation (2016-H 7081) would …

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McNamara legislation would create student loan ombudsman

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Rep. Joseph M. McNamara (D-Dist. 19, Warwick, Cranston) has introduced legislation that would establish a Student Loan Bill of Rights in Rhode Island.

The proposed legislation (2016-H 7081) would authorize the creation of the position of student loan ombudsman within the Division of Higher Education Assistance of the office of the commissioner of postsecondary education. The duties of the ombudsman would be to attempt to resolve complaints from student loan borrowers, compile and analyze data on such complaints and to otherwise assist student loan borrowers. The act would also provide that the commissioner of postsecondary education would review and evaluate applications for licensure as a student loan issuer.

“Acquiring loans and facing heaps of debt is a reality faced by many college graduates today,” said McNamara, who serves as chairman of the House Health, Education and Welfare Committee. “Student loan debt has increased from $350 billion to $1.2 trillion since 2004. That debt has become greater than the amount households owe on auto loans, home equity loans and credit cards. That means it’s time for us to take a greater interest in protecting student borrowers. Some loan providers have questionable business practices. This bill would create an ombudsman to assist students and provide information to the public.”

The student borrowing crisis, which has been marked by more students borrowing, larger loan balances and higher default rates, has launched this traditionally federal issue into the state policy arena.

The McNamara bill would ensure that some of the problems that arise from student loans would be addressed, namely in helping borrowers understand their rights and responsibilities, as well as providing information to the public, agencies and legislators regarding the problems and concerns of student loan borrowers.

“Based on what state agencies and the General Assembly hear from this ombudsman,” said Representative McNamara, “we will be able to analyze and monitor the student loan process and make any changes that are necessary to help student loan borrowers and make certain that federal and state rules and regulations are being properly implemented.”

The ombudsman would also be responsible for establishing a student loan education course that will educate potential borrowers regarding such topics as key loan terms, documentation requirements, monthly payment obligations, income-based repayment options, loan forgiveness and disclosure requirements.

The ombudsman would also be required to report annually to General Assembly on the overall effectiveness of the position and make recommendations for additional steps to be taken for the Division of Higher Education Assistance to gain regulatory control over the licensing and enforcement of student loan services.

The bill, which is cosponsored by Representatives Shelby Maldonado (D-Dist. 56, Central Falls), Arthur J. Corvese (D-Dist. 55, North Providence), Aaron Regunberg (D-Dist. 4, Providence) and K. Joseph Shekarchi (D-Dist. 23, Warwick), has been referred to the House Committee on Health, Education and Welfare.

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