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Minnesotans with student debt have new consumer protections

The Student Borrower Bill of Rights, which the Legislature passed this year, will protect borrowers from abuses by loan servicers.

Gustavus Adolphus College
Gustavus Adolphus College
As an educator of more than 20 years, I love to teach but I also love to learn.

I’ve invested a lot in my own professional practice, which comes with a hefty price tag. After I started paying on my student loans, I looked into consolidation and an income-driven repayment plan, as well as Public Service Loan Forgiveness. But communications with my loan servicer were confusing and frustrating – one statement saying I could pay almost $3,000 a month, then down to $750, which was still double what I had been paying. They have been no help in helping me navigate this process. I will have paid $30,000 in interest when I pay off my loans in 2037.

I wish I could say my story is unique, but there are thousands of Minnesotans in the same situation or worse. My union, Education Minnesota, has heard so many stories through its Degrees, Not Debt program.

Minnesota is ranked fifth in the nation for the amount of student debt we carry per-person at $37,492 for state college students, according to the Student Borrower Protection Center. Minnesota’s outstanding debt burden is $29.1 billion.

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A report issued in June by the Consumer Financial Protection Bureau (CFPB) outlined ongoing unfair, deceptive and abusive acts that loan servicers commit that prevent borrowers from accessing information that allow them to access loan forgiveness for 10 years of public service from a longstanding federal program, Public Service Loan Forgiveness.

For example, many essential workers who have been critical to our well-being during the COVID-19 pandemic are public employees. Under federal law, many should have been presented with information on how to access Public Service Loan Forgiveness.

The report found that servicers engaged in a deceptive act or practice by advising some borrowers they could not become eligible for this program, denying relief to too many.

That’s why Education Minnesota and its allies have been working on legislation that would protect and support those who take on education debt for years, and this year that effort turned into a new law: the Student Borrower Bill of Rights (SBBOR). It will now help provide relief should such deceptive practices take place in Minnesota.

Sarah Rother
Sarah Rother
The SBBOR will require student loan servicers such as Navient and FedLoan Servicing, the multimillion-dollar corporations that serve as intermediaries between borrowers and lenders, to operate in Minnesota under common-sense rules that we hope will be adopted nationally.

Student loan servicers have been sued by the American Federation of Teachers, the Consumer Finance Protection Bureau and states all over the country for taking advantage of borrowers and making it for systematic and widespread misinformation and deceptive practices that will now be unlawful in Minnesota.

Student borrowers will now have basic protections in place, such as:

  • Loan servicers will be required to communicate information about loans and repayment in a timely and accurate fashion. Borrowers will now be notified if and when a loan is transferred and to whom.
  • Borrowers must now be evaluated for repayment options that take income into account, making it easier for people to afford payments while staying on track and protecting their credit. Loan servicers will be required to determine if a borrower could benefit from forgiveness options.
  • Borrowers will be subject to an additional variety of consumer protections that level the playing field and make it possible for people with student debt to not just repay their loans but do so in a way that does not hurt their chances at home ownership, planning a wedding or starting a family — all decisions that borrowers are putting off because of the crushing weight of education debt.

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The SBBOR had bipartisan support and was authored by Rep. Zack Stephenson and Sen. Zach Duckworth. Stephenson has led on this effort the last three sessions, making sure there was awareness of the challenges Minnesotans face in paying back loans and receiving loan forgiveness.

Minnesota becomes the 15th state in the nation to pass a borrower’s bill of rights.

Student loan borrowers like me need someone on our side to protect us from abuses by loan servicers. Thankfully in Minnesota, now we do.

Sarah Rother, a middle school teacher in the Eastern Carver County School District who has testified at the Legislature on education debt issues through Education Minnesota’s Degrees, Not Debt program.


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