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.
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