by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Emma Schambach writes for the Martin Center about a new campaign from state officials involving student loans.
Student debt isn’t necessarily always bad. For some, taking out the necessary amount of loans to fund one’s education may be a prudent decision. But before taking out a loan, students should consider how much they actually need to borrow, from whom they should borrow, and whether they will likely be able to repay the loans after graduation.
Unfortunately, some students sign up for student debt without fully understanding what they are getting themselves into. If students don’t know what to look out for, they may take out loans from untrustworthy lenders or borrow more than they need. Of course, one way—and perhaps the best way— to address this problem is to prepare students in high school to make wise financial decisions.
Some states, such as North Carolina, are taking a different approach by cracking down on predatory lending. On April 27, 2021, the North Carolina Legislature introduced House Bill 707 entitled the Student Borrowers’ Bill of Rights. It was unanimously passed in the House and Education-Universities committee on June 24, 2021. On July 21, a revised version of the bill was sent to the Committee on Finance.
The bill came about because, currently, there is little protection provided for borrowers taking out loans. …
… In essence, the bill licenses and regulates student loan servicers and collects complaints from borrowers.
Specifically, the state Commissioner of Banks will be required to create licensing and regulatory systems for student loan servicers which will highlight the responsibilities and prohibited behaviors of those servicers.
Additionally, the bill mandates the creation of an ombudsman to hear borrowers’ complaints regarding aspects of the borrowing process—from paperwork processing times to reports of misinformation from loan servicers.
The bill is bipartisanly sponsored by Republican representative Jon Hardister, Republican representative Mitchell Setzer, and [Rachel] Hunt.