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Student Loan Information for Consumers

Student loans help students pay for college expenses such as tuition, books, and housing. There are two types of student loans: federal and private. The Division of Banks (DOB) regulates some types of private student loans and licenses certain federal student loan servicers and private student loan servicers.
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Regulation of Student Loan Servicing by the Massachusetts Division of Banks

  • A student loan servicer receives or solicits payments from a student loan borrower per the terms of the student loan and then makes the payments to the owner of the loan.  This could also mean communicating with the borrower on behalf of the loan owner or helping the student loan borrower prevent defaulting on a loan.
  • Anyone acting as a student loan servicer must be licensed by the DOB.
  • Banks, credit unions, bank and credit union subsidiaries, nonprofits, and public institutions of higher education are exempt from licensure.
  • If you have a problem with your student loan servicer, you may submit a complaint with the DOB.
  • The Attorney General’s Student Loan Ombudsman can help you obtain information about your loans, resolve disputes, get mistakes corrected, and explore your repayment options.

Student Loan Lending

  • The DOB has regulatory authority over state-chartered banks and credit unions providing student loans in Massachusetts.
  • Non-bank entities that make or assist in making student loans of $6,000 or less with an Annual Percentage Rate (APR) above 12% to Massachusetts consumers must have a small loan company license from the DOB.
  • The maximum interest rate for small lender student loans is 23% plus a $20 administrative fee.

Student Loan Repayment

  • Missing payments on a federal or private student loan can be harmful to your credit rating. Missing a single payment on a student loan can also result in late fees, additional interest charges, and can increase the cost of repayment.
  • If you have questions about repaying student loans, visit the Consumer Financial Protection Bureau's Repay Student Debt Guide for tips and tools on optimizing how to pay off student loans. The interactive guide is a valuable tool for repaying student loans in all types of situations, even in default.
  • Payments on federal student loans began again in October 2023.  Massachusetts borrowers can visit the Massachusetts Office of the Attorney General’s Student Loan Assistance webpage to learn about preparing for repayment. 
  • Also beware of debt relief scams when it comes to student loans.  Visit the U.S. Dept. of Education’s Avoiding Student Aid Scams webpage to learn more about the warning signs of a debt relief scam.

Relevant statutes and regulations about student loans

Additional Consumer Resources

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