A bill offering more oversight of student loan providers passed in the Colorado legislature last week with only two days left in the 2019 session.
This bill, sponsored by State Sen. Faith Winter (D-Westminster), will increase the responsibilities of student loan providers. Providers will be held accountable for ensuring borrowers are provided with timely and accurate information regarding their loans and any disputes.
Also, providers will be responsible for delivering an effective and efficient way to process payments for borrowers. In 2018, an estimated 761,000 Coloradans owed roughly $26 billion in student debt.
The Regulate Student Education Loan Servicers bill also calls for the addition of a full-time Student Loan Ombudsman to the Attorney General’s office. The legislation intends to give borrowers fair protections against predatory servicers, as well as the proper resources to make informed decisions on loan practices.
“Student debt is a huge challenge for many Colorado families,”
said Ali Mickelson, Director of Legislative and Tax Policy for the Colorado Fiscal Institute,” in a news release. “Borrowers will now have more resources for help, and the companies who serve their loans will have more accountability and responsibility to the people of Colorado.”
Many groups, including teachers unions, veteran unions, and student loan policy lawyers, supported the legislation, according to a news release by New Era Colorado, a non-profit organization, there are many groups,
It is not just students who will benefit from this legislation. Educators and other public service occupations involve federal loan services and require these same protections from private loan servicers and predatory loan practices.
Ellen Harnick, Western Office Director of the Center for Responsible Learning, points out how the new regulations included in this legislation will also contribute financial stability for low-income workers and minority groups.
“The student debt crisis is having a profound impact on the ability of people to establish financial security and invest in their futures, particularly low-income families and people of color,” said Harnick. “States like Colorado have the right and the responsibility to mitigate these impacts by overseeing student loan servicers and preventing fraud and abuse. We applaud Colorado lawmakers for taking this step toward accountability for servicers,”
The Regulations on Student Educator Loan Servicers bill awaits the signature of Gov. Jared Polis (D-CO) to become law.