December 26, 2013
Student Loan Default Protection May be Near
If your heart involuntarily jumps whenever you see “student loans” trending in the news with the hopes that well— maybe they’re finally ruling them away somehow…
Democratic senators Dick Durbin, Jack Reed, Elizabeth Warren and Barbara Boxer may soon become your new best friends.
By this time, everyone knows about America’s trouble with student loan debt. If you are not of the group of people who has that looming over your head, it is a high probability that your spouse or kids may be dealing with it.
Student loans also have one more darling characteristic: When they go bad, they Really Go Bad.
When a student loan enters default, your life becomes a virtual prison without bars. Issues such as collection fees, paycheck garnishment, the inability to open a checking account and more incredible hassles are now a part of your life– a defaulted student loan is one of the worse entries on a credit report.
USNews tells us that the earlier mentioned group of senators have introduced a daring Student Loan Borrower Bill of Rights to Washington D.C. on Thursday, which includes the Protect Student Borrowers Act that aims to hold institutions more accountable for student loan default.
Senator Reed on the subject:
“They will have to have skin in the game…They will have to make financial judgments based upon how well-informed and how reliable their graduates are in terms of paying back their student loans. It provides incentives for institutions to take proactive steps to ease student loan debt.”
Essentially, the senators believe that if colleges and universities are more affected by a loan going into default, they may begin to do some cost adjustments if they know that most of their students will only be able to meet the costs with heavy student loans. If the act is put in order, schools may also become a bit more generous with scholarships, grants, work study and other financial options instead of making a loan the go-to option if a student comes up short.
The act intends to be fair; Reed went on to state that institutions would have to pay 5 percent of its defaulted student loans only if their default rate is between 15 and 20 percent.
As with all politics–there is opposition concerning new ideas, but most are willing to wait though a few years months of blustering filibustering if it means a little relief from the high cost of education.
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