The vast majority of student loan debt in the US comes from various federal loan programs. However, a smaller percentage of student loans are privately held. These are loans that originate from banks or other financial institutions. Private student loans do not have the same protections as federal student loans. However, a Senate banking bill would add multiple protections for private student loan borrowers.
The Economic Growth, Regulatory Relief, and Consumer Protection Act could add the following protections to private student loans:
- Encouraging default rehabilitation. Private student loan borrowers could complete loan rehabilitation programs through their lenders. Completion of these programs would remove records of defaults from credit reports.
- Ending default acceleration. Lenders can accelerate the default process or declare loans in default when cosigners pass away or file for bankruptcy. This practice would end if new bill is signed into law.
- Protecting cosigners. Cosigners can be on the hook for loans when borrowers die. If the bill became law, cosigners would not have to pay back student loans when borrowers pass away.
Senator Dick Durbin also added an amendment to the bill which would have far-reaching consequences for student loans. The amendment adds a “student loan bill of rights” and clarifies undue hardship for student loan bankruptcies. Although the bill has bipartisan support (meaning it is supported by members of both parties), there are mixed feelings among lawmakers about its other content. Student loans are only a part of what is covered by the legislation.
Questions About Student Loan Repayment? Contact Our Kansas City Student Loan Lawyers
Continue to follow our Kansas City bankruptcy law firm on a Facebook and Twitter for future updates on student loans news. If you are struggling with student loans and other debt obligations, then our attorneys are here to help. Our Kansas City student loan lawyers have experience with student loan bankruptcy cases. You can reach out to our attorneys by calling our office or by filling out our online case review form.