Scanlon Introduces Legislation to Protect Student Loan Borrowers
Today, Representative Mary Gay Scanlon introduced the Justice for Student Borrowers Act, which would prohibit predatory lending practices by private student loans lenders.
Currently, nearly 86% of private student loan lenders bury in their loan documents provisions that strip student borrowers of their right to take a dispute over the loan to court. Lenders go so far as to prohibit students from forming or joining a class action law suit. Instead, the lenders require borrowers to go through costly arbitration, an arcane process that often favors corporations.
“Nearly 44 million people shoulder our $1.5 trillion student loan debt crisis -- a crisis perpetuated by predatory lending and collection practices, ruinous monthly payments and double-digit interest rates, and little to no regulation,” Rep. Scanlon said. “We have an obligation to protect students and the Justice for Student Borrowers Act restores legal rights to students too often taken advantage of by private student loan lenders.”
“Forced arbitration is a threat to our system of justice,” Chairman Jerrold Nadler said. “This is particularly true for students who have no idea what rights they are signing away as a condition for obtaining a private student loan. This must be stopped. I applaud Congresswoman Scanlon for her leadership on the Justice for Student Borrowers Act, which would ban forced arbitration clauses in private student loans.”
“Forced arbitration is nothing more than a predatory tactic employed by large corporations that hurt students, hurt consumers, and hurt the economy,” Chairman Cicilline said. “While the courts have refused to stand up to companies who use forced arbitration clauses in their contracts, Congress will not back down from this fight. We have a duty to help all students get ahead, and passing the Justice for Student Borrowers Act is a critical step in the right direction.”
A final copy of the bill can be found via this link.