Banking Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-6915

Title:

AN ACT CONCERNING A STUDENT LOAN BILL OF RIGHTS.

Vote Date:

3/10/2015

Vote Action:

Joint Favorable

PH Date:

3/5/2015

File No.:

SPONSORS OF BILL:

Banking Committee; African American Affairs Commission

REASONS FOR BILL:

Under current state law, student borrowers do not have adequate support should there be an issue with the financial institution issuing their loans. The bill creates a Student Loan Ombudsman within the Department of Banking to assist student borrowers in navigating the loan process and educate them about different options they have for repaying their loans. The bill also creates additional regulations for loan servicers operating in Connecticut. Current law does not require loan servicers to be licensed in the same way that we license other debt servicers. The bill requires that loan servicers operating in Connecticut obtain a license from the Department of Banking.

RESPONSE FROM ADMINISTRATION/AGENCY:

Bruce Adams, Acting Commissioner, Department of Banking

Acting Commissioner Bruce Adams submitted testimony in support of HB 6915. The Commissioner testified that the country has been taking out increasing amounts of student loan debt, and that since 2004 the amount of student loan debt has tripled. The Department is in favor of the creation of a Student Loan Ombudsman that would allow them to use their expertise to resolve consumer complaints and help educate the public on student loans. The Commissioner was also in favor of licensing student loan servicers just as they license other loan providers and debt collectors.

Jane Ciarleglio, Executive Director, Office of Higher Education

The Office of Higher Education submitted testimony in support of HB-6915. The Office feels that the bill will help provide student loan borrowers with protections and education that they are currently missing. The Office is concerned with the over-borrowing practices of students, and sees the bill as a way to mitigate that.

NATURE AND SOURCES OF SUPPORT:

Alok Bhatt, Asian Pacific American Affairs Commission

The APAAC submitted testimony strongly in support of HB 6915. The Commission supports the language creating a Student Loan Ombudsman position to monitor student loan activity, mediate student loan issues and disputes, and provide educational resources.

Jim Horan, Executive Director, Connecticut Association for Human Services

CAHS submitted testimony in favor of the creation of a Student loan Ombudsman. The Association believes that the position would help protect the interests of borrowers and discourage borrowers from taking out loans with unfavorable terms or unmanageable monthly payments.

Jeanette Weldon, Executive Director, Connecticut Higher Education Supplemental Loan Authority

The Connecticut Higher Education Student Loan Authority is in favor of the creation of a Student Loan Ombudsman, and believes the position will provide additional support to Connecticut students and enhance their financial literacy. CHESLA also expressed their support for language requiring the licensing of all student loan servicers operating in Connecticut. CHESLA also offered technical assistance to assist with a smooth implementation of the parameters of the bill.

Evan Preston, State Director, ConnPIRG

Mr. Preston submitted testimony in favor of creating a Student Loan Ombudsman and regulating Student Loan Servicers. ConnPIRG feels these steps will help alleviate some of the growing student debt burden and help keep graduates in Connecticut.

Lindsay Farrell, Connecticut Working Families Organization

CWFO submitted testimony in favor of the creation of a Student Loan Ombudsman who would advocate for student loan borrowers and help increase financial literacy. The Working Families Organization feels that in recent years the student loan industry has become overly profit driven to the detriment of borrowers and that this legislation will help curb that trend.

Subira Gordon, African-American Affairs Commission

The AAAC submitted testimony strongly in favor of the regulations outlined in HB 6915 as well as the creation of a Student Loan Ombudsman. Miss Gordon noted that African American students are twice as likely to borrow and borrow twice as much. The Commission feels that this bill would help these students better manage and control their debt.

Tom Swan, Executive Director, CT Citizen Action Group

CCAG is in favor of the language in HB 6915 and urges the legislature to look towards a debt free college education in the future. They drew comparisons between the functions of the Student Loan Ombudsman and the Health Care Advocate Office. The Group also urged that the powers of the Student Loan Ombudsman be broad enough to protect students from for-profit predatory colleges and servicers.

Vijay Nair, President, Connecticut State University American Association of Professors

The Association testified that there is a growing need to protect student loan borrowers from predatory lending practices and ever growing debt. The CSU feels that the language of the HB 6915 will help educate student loan borrowers and curb predatory lending practices through regulation of student loan servicers.

Additional testimony was submitted in support of this bill by the following individuals:

Nancy Spagnolo

The Congress of Connecticut Community Colleges

Molly Rockett, Student, University of Connecticut

Dasia Moore, Yale College Democrats

NATURE AND SOURCES OF OPPOSITION:

None submitted. (For HB 6915).

Reported by: Sara LeMaster

Date: 03/24/2015