Student Debt

Until 2019, student loans were the only type of major consumer loan without annual licensing requirements for servicers and consistent state and federal regulations to govern their behavior — unlike servicers for mortgages, credit cards, and business loans that must follow strict rules to determine their interactions with consumers, set maximum rates and charges, and provide standard remedies for consumers in default.

This lack of oversight led the Consumer Financial Protection Bureau (CFPB) to find many student loan servicers:

  • Inappropriately and inaccurately discourage borrower-friendly alternative payment plans that could save borrowers money
  • Fail to respond to questions and payment processing errors
  • Fail to provide sufficient information to borrowers regarding payments, interest rates, and eligibility for benefits such as loan forgiveness

Student loan debt has topped $1 trillion in recent years, making it the largest type of consumer debt outstanding other than mortgages. The average student loan borrower graduates with nearly $30,000 in debt. The CFPB estimates over 1 in 4 borrowers are delinquent or have defaulted on their student loan debt. 

In 2019, members of our working group led the passage of SB-002, a landmark bill requiring licensure and basic oversight of student loan servicers seeking to operate in the State of Colorado. This bill ensures that consumers are protected and that the state has the necessary power to enforce consumer protection law across sectors by preventing student loan servicers from defrauding, misleading, or deceiving student loan borrowers; misapplying student loan payments to the outstanding balance; or failing to annually report the payment history of a borrower to a consumer reporting agency. The bill establishes that any violation of these regulations amounts to deceptive trade practice and outlines the options student loan borrowers have in pursuing civil action.

Our working group is focused on the following actions:

  • Implementation and enforcement of SB-002
  • Debt-Free College