February 19, 2014
Bullet Points: Inside the 2014 Student Loan Borrowers' Bill of Rights Act
In the summer of 2013 the debate over the high level of student loans in this country reached a crescendo. In the absence of a bipartisan solution, rates for federal student loans doubled. A month later, thanks to media pressure, Congress was able to pass legislation reducing them slightly, but still devoid of any lasting legislative solution. Now, a new bill hopes to give some relief to millions of young Americans struggling under the weight of student debt.
The Student Loan Borrower's Bill of Rights Act, introduced by the Democratic Representative Frederica Wilson of Florida is the first step. The legislation would restore bankruptcy protections for students carrying both federal and private loans, and would limit the collection time to six years. The would also prevent student loan debt from being used to hurt a young person's credit score and financial future.
“The soaring cost of college is not only hurting students and their families; it is hurting consumer demand and, in turn, hurting our economic recovery,” Wilson said in an interview with TakePart. “I’m introducing student loan reform now because I think it can improve lives, boost Americans’ purchasing power, and help promote job creation.”
Currently, there is over $1 trillion of student loan debt in America, with the average young person carrying an average of nearly $29,000 in student debt personally. While crippling for the young people who simply want to be able to afford a college education, student loans are actually a big windfall for the federal government. In 2013 the Department of Education made $41.3 billion from student loan interest rates.
Democratic Senator Elizabeth Warren of Massachusetts is another ally in the fight against student loan debt. This year she has also drafted legislation that would pressure colleges to keep costs down, and force colleges that didn't meet certain standards, such as timely graduation rates, to refund part of a student's loan.
"We cannot bury our heads in the sand and pretend the profits don't exist, or use accounting tricks to make them disappear," Warren said. "It's time to end the practice of profiting from young people who are trying to get an education and refinance existing loans."
Unfortunately, when it comes to meaningful student loan reform, the political will just isn't there, and it is not likely that these renewed efforts to provide relief for people struggling with student loan debt will come to fruition. Both banks and universities profit from the current cost of tuition and interest rates of student loans. The lobbying presence for both of these industries is massive, whereas debt-ridden young people don't have similar clout when it comes to Capitol Hill. While it's wonderful to see such fighters as Representative Wilson and Senator Warren taking up the mantle for students, there is still a long way to go toward meaningful reform in the student loan crisis.
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