Oregon Legislature Passes Student Borrowers Bill of Rights

June 25, 2021
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The Oregon legislature today passed SB 485, a bill requested by Oregon Attorney General Ellen Rosenblum to help Oregon’s 540,000 borrowers who have amassed staggering amounts of debt to pay for their education. This “Student Loan Borrowers Bill of Rights” will institute basic regulations for student loan servicers and important consumer protections for borrowers. It also creates a student loan ombudsperson at the Oregon Department of Consumer and Business Services (DCBS) to handle complaints against student loan servicers and educate borrowers about loan repayment options.

In Oregon, it is estimated that outstanding student loan debt has surpassed $20.5 billion, with the average debt load per borrower at over $38,000. This includes student debt owed by over 44,208 borrowers over 65 years old and 88,506 borrowers who reside in rural Oregon. It is estimated that over 85,000 Oregonians are currently delinquent or in default on their education-related loans.

“This is the third legislative session in a row in which this critical Student Borrowers Bill of Rights has been introduced at my request. I am so pleased that the ‘third time was a charm!’ For so many Oregon families, student debt is inescapable and stifling,” said Attorney General Rosenblum. “On top of the sheer amount of debt, student loans are complex. Borrowers make financial decisions at a young age that will impact them for a long time to come. Once the loan payments come due, a good loan servicer can provide helpful information and guidance. But unfortunately, many are more concerned about their bottom line than protecting the borrowers.”

In 2015, Connecticut became the first state to create a system for licensing and regulating student loan servicers. Since then, more than a dozen states have adopted basic protections for borrowers. Under SB 485, student loan servicers will be required to obtain a license from DCBS and refrain from fraudulent, deceptive, and dishonest dealing.

A January 2021 Consumer Financial Protection Bureau report found more violations among student loan servicers during the first ten months of the COVID-19 pandemic than any other area the Bureau supervises. The passage of this law comes at an important time for Oregon’s economy, as student loan borrowers are set to lose their COVID-19 emergency federal forbearance period in September. While certain provisions of the bill are not immediately effective, the protections in SB 485 will be important to helping borrowers avoid default in the future as Oregonians emerge from the pandemic.

“The complaints we received from student loan borrowers describe abusive practices by loan servicing companies that are reminiscent of what happened to borrowers in connection with the mortgage foreclosure crisis more than a decade ago, ” said AG Rosenblum. “We also know that significant racial disparities exist with regard to the student debt burden. Studies show that Black and Latinx students take on a greater amount of education-related debt and experience higher rates of delinquency and default. This new law will put tens of thousands of Oregonians on a better and more sustainable path and will hopefully prevent what should be a manageable debt load upon graduation from becoming the obligation of a lifetime for our students.”

Other supporters of the bill included:

Treasurer Tobias Read, the Student Borrower Protection Center, AARP, the Oregon Student Association, DevNW, Center for Responsible Lending, American Association of University Women of Oregon, OSPIRG, Stop the Debt Trap Alliance and Oregon League of Women Voters. AG Rosenblum also thanked HB 485’s chief sponsors, Senator Kathleen Taylor and Representative Karin Power, for their partnership on this important legislation. She also thanked DCBS for its willingness to take on these new regulatory and counseling roles.

In 2017, AG Rosenblum also initiated legislation requiring all Oregon colleges and universities to send students annual, easy-to-understand letters explaining the scope of their federal educational debt. The letters to student borrowers must include the amounts of loans taken out, and an approximate payment plan.