Right now, legislators are considering a new Senate banking bill designed to ease some requirements on mortgage lenders and banks. This is part of a general rollback in consumer protections put in place during the Obama administration.
However, some provisions in the updated bill could provide protections for student loan borrowers and consumers concerned about data breaches.
While there’s plenty to consider in the text of the bill, here’s what you need to know about the bill before it’s finalized.
Student loan protections in the Senate banking bill
Two new proposals in the legislation offer some degree of relief for borrowers with private student loans.
First, the Senate banking bill changes the way cosigned loans would be handled by private lenders. Primarily:
- If the cosigner on a private student loan declares bankruptcy or dies, the lender can’t accelerate the loan or declare the loan in default.
- When a student loan borrower dies, the lender must release the cosigner from the obligation to pay the debt.
Additionally, student loan borrowers could get help having a default report removed from their credit history. Once a student loan borrower demonstrates they can make timely payments while participating in a lender’s rehabilitation program, they could remove a default report once for each eligible loan.
Student loan bill of rights added in
In an effort to bolster more protections for student loan borrowers, Senator Dick Durbin (D-Ill.) introduced an amendment that incorporates a student loan bill of rights.
The student loan bill of rights is based on legislation introduced in 2015 that didn’t go anywhere. Here are the six rights, as listed:
- Alternative payment options to avoid student loan default.
- Be informed about key terms and conditions, as well as additional repayment options that can help the borrower avoid higher costs.
- Know your student loan servicer and have ready access to contact information for problems.
- Consistency in the application of monthly payments and a requirement that lenders honor advertised promises and promotions.
- Fairness, including a grace period when loans are transferred, as well as debt cancellation for the complete disability or death of a borrower.
- Lenders should offer a timely resolution for problems and certify private loans in a timely manner.
Durbin’s amendment would also clarify “undue hardship.” Student loans could be discharged in bankruptcy if:
- Borrowers receive Social Security disability benefits.
- Borrowers act as caregivers for veterans, chronically ill or elderly family members or veterans.
- Borrowers make less than 200% of the federal poverty guidelines.
Finally, the amendment would also require student loan borrowers to receive information about remaining federal aid options so that they could avoid taking on private student loan debt.
Freeze your credit for free
Another consumer protection included in the Senate banking bill would require credit reporting agencies to offer free credit freezes.
There are some state laws that mandate free access to this protection, but those are few and far between. In fact, reports CNBC, many consumers are stuck paying between $2 and $10 for each credit freeze at each of the firms.
High-profile data breaches are likely behind this move to include free credit freezes in the bill. In fact, one credit reporting agency, Equifax, has been the subject of an on-going investigation involving a data breach last year.
What you can do to advocate on your behalf
Because the bill does have wide bipartisan support, there is a good chance it will pass. However, it still needs to be debated, and not all of the proposed amendments will be accepted.
If you want to weigh in, contact your Senate representatives. Additionally, pay attention to the progress of the bill. If the Senate passes the legislation, it will go to the House of Representatives, where it could undergo further changes before potentially ending up on President Trump’s desk.
In the meantime, find out which student loan servicer you need to deal with. If you are having a problem making your payments, find out if you are eligible for income-driven repayment plans for your federal loans or look into refinancing your private loans. These options can reduce your payments and make them more manageable.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|