Association for Public Policy Analysis & Management

The average student debt for college graduates continues to climb. The average California borrower has $22,585 in debt, and 502,846 of borrowers are behind on their payments. Since 2012, 55,000 complaints of deceitful practices have been filed against loan servicers through the Consumer Financial Protection Bureau. Loan servicers control every aspect of a student’s loan, including payments, refinancing, repayment plans, and access to information.

Student loan servicers have been previously reported to lose student borrowers’ paperwork or misapply payments, given student borrowers wrong, inadequate, or misleading advice that has led the borrower to face severe consequences, including default.

Project Scope

In collaboration with Consumer Reports, an independent nonprofit organization that advocates for consumers, we are conducting in-depth interviews of student loan borrowers in Los Angeles County to gather data to advocate for the enhanced protection of student borrowers through AB376, “Student Borrower Bill of Rights.”

The purpose of AB 376, is to ensure that individuals with student loan debt are given reliable and truthful information, quality customer service, and meaningful access to repayment and forgiveness programs. AB376 was created in aims to 1) address the gaps in Student Loan Servicing Act and 2) guarantee protections of student borrowers given federal inaction.

AB376 was introduced in the California State Assembly on February 5, 2019. As of August 30, 2019, it was held in the appropriations committee until the legislative session resumes in 2020.

Data collection and analysis

We are conducting in-person and phone interviews with 30 student borrowers and 20 key stakeholders. Our data collection will address the following:

1. Their experiences with student loan service providers and identify challenges with repayment and default.
2. Understand the impacts of debt burden on health, mental health, and financial stability.
3. Assess the impact of AB 376 and provide additional recommendations to promote Consumer Reports’ role in better protecting student borrowers through AB 376.

Sampling Frame

Through a snowball sampling strategy, we identified five categories of a diverse range of opinions and expertise regarding student debt and service lenders:

• Student borrowers (Target 30): any individual that has outstanding, defaulted, or paid off student debt who is currently living or has a loan originating in one of the target districts.
• Institutions (Target 5): any two year, vocational or 4 year institution that is public or private.
• Loan Servicers (Target 10): any loan servicer, private or public, that manages or services student loans.
• Advocates (Target 10): nonprofits and experts in the field.
• State Senators (Target 5): Steven Bradford; Anthony Portantino; Lena Gonzalez; Maria Elena Durazo, Ling Ling Chang.

Policy recommendation and advocacy efforts

Our findings will be used by Consumer Reports and others to amplify the grassroots movements for student borrowers and tackle racial imbalances of the student debt burden. Our report will support advocacy efforts for the passage of AB 376 and provide information to the five California State Senators in the Appropriations Committee, highlighting the impact of student debt and loan servicers of their constituents.