The proposed Bill of Rights would help protect and assist the nearly 130,000 student loan borrowers in Delaware. (Photo by designer491/Getty Images)

Student loan borrowers could get Bill of Rights

Jarek RutzGovernment, Headlines

The proposed Bill of Rights would help protect and assist the nearly 130,000 student loan borrowers in Delaware. (Photo by designer491/Getty Images)

The proposed Bill of Rights would help protect and assist the nearly 130,000 student loan borrowers in Delaware. (Photo by designer491/Getty Images)

Laws that would establish a Bill of Rights for student loan borrowers and adjust the transfer of leave days for educators garnered support in a Senate Education Committee hearing Wednesday. 

Senate Bill 132, sponsored by Sen. Sarah McBride, D-Wilmington, would make Delaware the 19th state to have a Bill of Rights for student loan burrowers. 

Of the 18 states who already have such, 12 have a student loan ombudsperson – which is essentially an advocate who can help with resources, disputes and assist legal matters – and 13 have a licensing program, with another two states having a registration program instead of a licensing program. 

The Student Loan Borrower Bill of Rights would:

  1. Require student loan servicers to engage in certain practices related to communications with student loan borrowers and cosigners of student education loans and handling of transactions by student loan borrowers and cosigners of student education loans.
  2. Prohibit student loan servicers from engaging in certain practices including unfair or deceptive practices or abusive practices.
  3. Require student loan servicers to retain records related to student loan transactions for seven years and to yearly report non-identifying information about student education loans serviced in Delaware, including default and delinquency rates, to the student loan ombudsperson.
  4. Establish the Office of the Student Loan Ombudsperson which will receive, investigate, attempt to resolve complaints from student loan borrowers and more.

Here’s how much it would cost the state:

McBride pointed out that Delaware is home to nearly 130,000 student borrowers with an average debt burden of about $37,000.

The national average is $28,950. 

“These 130,000 Delawareans are our constituents and they are facing the challenge of fitting substantial loan payments into an already tight monthly budget constrained by inflation and increased interest rates,” McBride said. “My office and probably many of yours have heard from individuals who are unable to make their payments who are struggling with student loan debt. And of course, in some instances struggling with what one might even argue is fraudulent or abusive behavior by some servicers.”

While federal student loans have a good amount of regulations, she said federal regulations don’t include private student loans, which account for roughly 10% of the market.

“In this committee over the last decade or so, especially with respect to early childhood education, we’ve talked a lot about brain development and the field of neuroscience with respect to brain development has come up with a lot of very interesting and important stuff,” said Senate President Pro Tempore Dave Sokola, D-Newark, who is also the longest serving state legislator.

While that doesn’t seem to have direct correlation to the bill, Sokola said it’s important to remember that while it’s important for young children to get the start they need for success, the human brain still develops until about 25 years of age.

“The last part of your brain development is in the sections of the brain that deal with judgment, and we have some of the most sophisticated marketing and loan servicing actions at people who are 18-to-23 or so going to college, into grad school, at a time when maybe some of that sophisticated marketing might not be at people who really aren’t quite ready to make some of those decisions.”

Unfortunately, he said, student loan debt has tragic consequences to far too many young adults.

Buckson said he is in no way opposed to the bill, but said there is concern about the Ombudsman Office just because there is such a large number of burrowers and that could create workload challenges. 

“I echo your thoughts, your statements about the development of individuals up until young adulthood,” Buckson said. “I would say my concern is that the cure is somewhat prior to the signature and the education that goes around it. I think we have it backwards.”

Buckson said a lot of the degrees that students pursue might not yield jobs, or might result in a low-paying job where it’s nearly impossible to pay back the loans. 

While the bill seemed to have bipartisan support, Senate committees do not take a public vote. Rather, the members sign the bill tracker with their vote and the status of the bill is updated on the General Assembly website, typically a few hours after the meeting.

If released by committee, SB 132 will be discussed by the full Senate body. 

Senate Bill 20, sponsored by Senate Majority Leader Bryan Townsend, D-Newark, would adjust a law that dates back to 1997.

Rather than permitting public school employees to transfer two of their days off for one day off for another employee, Townsend’s law would change the ratio to one-to-one.

“So 30 years ago, more than that now, when I started at 24 years of age, I was reminded you get 10 days a year, and don’t burn them up because you never know when life’s gonna hit you,” said Sen. Eric Buckson, R-Dover and a former educator. 

He said the two-for-one ratio created challenges.

“You want to help, but you also are reminded that life could hit you in the face too,” he said. “Hopefully there’s no evidence that’s presented that says this is an obvious fiscal burden, because that’s the only reason to imagine it [two-for-one] was ever in place. I haven’t heard that, and I don’t even know if that would necessarily matter because I think that it’s worthy of moving on.”

There is no fiscal note associated with the bill.

 Senate Minority Whip Brian Pettyjohn, R-Georgetown, said the one-to-one leave is only fair. 

Tammy Croce, executive director of the Delaware Association of School Administrators, said her organization is in full support of the law.

She said when the two-for-one ratio was set, there weren’t programs set up like short-term disability pay, FMLA and paid parental leave. 

If released by committee, SB 20 also heads to the Senate floor for discussion.

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