Debt Relief Compliance Attorney
Felix Shipkevich April 9, 2018
Student loan Debt Relief laws Washington
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10 Takeaways from New Washington State Student Debt Relief Laws

This June Washington State student-borrowers struggling with student debt will benefit from House Bill No. 1169, the Student Opportunity, Assistance, and Relief Act (SOAR). The new law updates student debt collection laws for private student loans, primarily repealing license suspension laws for professional licenses or certificates for Washingtonian student-borrowers that defaulted on their loans.  SOAR was signed by Governor Jay Inslee on March 22nd, taking effect on June 7th. Just a week earlier on March 15th Gov. Inslee signed into effect The Washington Student Loan Bill of Rights (SB 6029 / HB 1440), which requires student loan services to have register licenses in order to operate within the state among other student debt relief protections.

These laws would seem revolutionary as Washington DC and a variety of other states have been drafting licensing requirements and other debt relief practices laws for student loans. Washington State laws have passed with relative silence, maybe impart because the state has had a $24.4 billion student loan debt for the last 2 years. The Washington State Attorney General’s Office report calculated that more than 800,000 residents in the state owe in student debt, 35% increase in the last 10 years. The report found that nearly two thrids of national student loan dent is owed by women, and among all low-income backgrounds defaulted on loans more frequently. Borrowers aged 60 and over grew more than 35% in the last 5 years. After the initial publication of the report, State Attorney Bob Ferguson stated, “the numbers are staggering. . .There are too many student loan borrowers in Washington who are struggling to make payments.”

Here are 10 takeaways from the new laws:

The Student Opportunity, Assistance, and Relief Act (SOAR), SB 1169.

 

1.Repeals a variety of statutes in the law that allows regulators to revoke or suspend professional licenses and certificates when borrowers default on student loans.

2. Reduces the 12% judgement interest rate (highest in the country) for unpaid student loan debt to two percentage points above the prime rate, unless the judgement interest rate is specified in the contract.

3. Exempts from garnishment the greater of 85% of earnings or fifty times the minimum hourly wage of the highest minimum wage law in the state.

4. Exempts from garnishment $2,500 in bank accounts.

5. Defines “private student loans” solely to refinance a private student loan and excludes “an extension of credit made under an open-end consumer credit plan, a reverse mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling.”

Student Loan Bill of Rights, SB 6029

 

6. Designates a student loan advocate “to provide timely assistance to any student education loan borrower with any student education loan. The student loan advocate may hire additional staff as necessary to implement this section.” The Advocate receives and reviews complaints and must be referred to the Department of Financial Institutions to investigate. Also assists in applying for forgiveness or discharge of loans, and communicating with loan servicers to resolve complaints.

7. Servicers License. student loan servicers must be licensed thorugh the state Department of Financial Institutions. Exemptions apply for certain servicers and programs, including trades, technical, vocational, and apprenticeships.

8. Servicer statutory duties Must offer free information about repayment options, Advocate resources, info on fees assessed, maintain written and electronic loan records, and respond to borrower request for information within 15 days, among other responsibilities.

9. Third-party Services providing student loan modification services. Until services are rendered, third-parties cannot charge fees or receive money.

10. Bank Exemptions “any person doing business under, and as permitted by, any law of this state or of the United States relating to banks, savings banks, trust companies, savings and loan or building and loan associations, or credit unions” are completely exempt, but does not include state banks chartered in other states.

“Pursuing an education should not force students to take on insurmountable debt. We must do more to protect Washingtonians who feel like higher education equals a debt sentence. . .the impact could be profound for our state and our country if this trend continues.” —Governor Jay Inslee

Image by John Walker via CC Licensing
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