Student loan borrowers in Delaware may receive the help they need if a legislation intended to protect them is passed.
Delaware legislators have introduced a bill that aims to protect student loan borrowers from predatory practices and to educate incoming and outgoing students about loan procedures.
Rep. David Bentz, D-Newark/Bear, said he drafted House Bill 349 as a response to the dramatic growth in student loan debt and defaults.
“Being relatively young for a legislator….It’s really effecting my generation who delay their plans, such as buying a house or starting a family, because they have this financial burden hanging around their neck when they come out of college. And it’s really difficult and it’s taking years and years to pay back.”
Nationwide, about 70 percent of students earning a bachelor’s degree graduate with debt that averages nearly $30,000, according to the White House.
In Delaware, an estimated 129,000 residents have student loan debt and on average graduate with nearly $34,000 in student loans. That’s an increase of 129 percent from 2004’s average debt of $14,780, according to a press release issued by Bentz.
Bentz’s legislation would create a student loan ombudsman position within the Office of the State Bank Commissioner in order to receive, investigate and assist with complaints and questions from student loan borrowers. The ombudsman also would analyze data trends to recommend actions to combat student loan issues.
The legislation would establish a student loan education course to inform borrowers about key loan terms, documentation requirements, payment obligations, income-based repayment options, loan forgiveness and disclosure requirements. The program also educates graduates on how they can pay loans back.
Bentz said many students aren’t informed on the details of student loans, and believes his bill is a much needed resource for Delawareans. The legislation will be reviewed in the Education Committee Wednesday.
“I think there’s a lack of understanding as to how large a financial burden it is—especially when considering it’s 18 to 19-year-olds taking these loans out,” Bentz said.
“We wouldn’t expect them to understand the nuances of mortgages at that stage in their life, but we’re somehow asking them to understand the nuances of a large student loan.”