Bill proposed to help student loan borrowers in the first state

DELAWARE – In the first state, two legislators are calling for change when it comes to student loans.

This will help millions of borrowers. Delaware may be the 18th state to pass this legislation, but Senate Bill 132 is set to protect those who enter into financial aid agreements now. “To help facilitate resolutions between student loan borrowers and student loan servicers,” Delaware Senator Sarah McBride said.

A watchdog in the Delaware Department of Justice is one thing Senate Bill 132 set out to do. It will also “provide Delaware student loan borrowers with a series of protections to ensure that they have the transparency and support necessary to navigate these incredibly complicated long-lasting financial decisions,” Sen. McBride said.

Healthy student loan options are something officials call necessary given the current state of the economy. “Face a workforce, a career option where we’re still too often seeing stagnant wages, where families are already struggling to make ends meet outside of the context of student loans, they then have to grapple with how to make ends meet,” Sen. McBride said. “Rate of inflation being what it is as well as income going down, the parents aren’t able to assist as much as they want to or used to be able to,” Dottie Fultz, Associate Director of Federal Programs and Compliance with Delaware State University said.

By extending these consumer protections, bill sponsor, Senator Sarah McBride says more students can avoid a long-term financial hole. “Too often we’re seeing young people be taken advantage of by the private student loan servicers, they’re not getting the information they need, they’re not understanding the interest rate they’re going to have to pay, they’re not fully understanding the life long consequence that this could have,” the Senator said.

This is a problem that officials at Delaware State University have seen come through their doors. “We know there are some students that file stolen identity claims, stuff like that with their servicers, and it doesn’t necessarily mean that the servicer did anything wrong, but we do see that more and more these days,” Fultz explained.

With these protections in place: “we can ensure that there are regulations and protections in that context we’ll certainly see less abuse in that space,” Senator McBride added.

This comes as the pandemic-era pause on student loan repayments ends on June 30th. There are 43 million student loan borrowers nationwide. The senate bill is now assigned to the senate education committee.

DSU says the school will be launching its financial literacy classes again this fall.