WASHINGTON, DC – This week, U.S. Senators Dick Durbin (D-IL) and Jack Reed (D-RI), a senior member of the Senate Banking Committee, introduced a key amendment to improve consumer protections for federal and private student loans. The amendment includes a Student Loan Borrower Bill of Rights to improve federal and private student loan servicing, restoration of private student loan dischargeability in bankruptcy, protections for service members and veterans, and protections from excessive wage garnishment for struggling borrowers.
“If we can take up the issue to make it easier for banks in America, we can spare a few minutes to debate whether or not we can make it easier for student borrowers to survive when the student debts that they face are stopping them from moving forward in their lives – massive debt that stops them from getting married, buying a home, a car, starting a family, that’s the reality for many families across America,” said Senator Durbin. “I hope my colleagues will join me. It would be terrific if we could allow on the floor of the Senate those speeches and a vote on that critical issue.”
“It’s crucial that we do all we can to protect student loan borrowers,” said Senator Reed. “Strengthening student loan servicing and protections for private student loan borrowers, including in the growing refinancing market, and providing greater transparency and accountability for campus-based banking products beyond just credit cards are important steps that will ensure that the many abuses that have taken place against student loan borrowers won’t happen again. Malign actions by financial institutions must be detected and prevented for consumers everywhere, and students should and must be able to enjoy basic protections as they pay back their student loans.”
Durbin and Reed hope to include the amendment to the so-called Economic Growth, Regulatory Relief, and Consumer Protection Act, legislation that Reed says will water down the Dodd-Frank financial reform law. On Wednesday, Senator Reed voiced his opposition to the overall bill on the Senate floor.
The new Durbin-Reed student loan amendment includes:
- The Student Loan Borrower’s Bill of Rights, which improves federal and private student loan servicing;
- Restoring dischargeability for private student loans in bankruptcy.
- The Know Before You Owe Student Loan Act, which requires that borrowers be notified of any remaining federal financial aid before taking on necessary private student loan debt;
- Clarifying the “undue hardship” exception that Congress wrote into the bankruptcy code for student loans; and
- Other provisions that will help ease student loan debt for American families and our men and women in uniform.
The amendment is supported by: National Consumer Law Center, Center for Responsible Lending, National Association of College Admissions Counseling, American Federation of Teachers, National Education Association, and Young Invincibles.
A full summary of the amendment is available here.