Fact Sheet: The Checklist to Support Student Loan Borrowers
A quick guide of student loan policy solutions that public policy leaders must support.
Refinance Student Loans
Establish a program to refinance both federal and private student loans.
- Currently there is no federal refinancing option for student loans.
- Federal refinancing could help private student loan borrowers take advantage of the repayment programs and additional protections of federal loans.
- Under one proposal, 25 million student loan borrowers could lower their interest rate and monthly payments, saving an average of $2,000 over the life of their loans.
Simplify and Strengthen Repayment Options (including PSLF)
Expand and protect repayment options and create simplified systems for enrollment.
- There are currently over 30 operational repayment plans, with confusing and sometimes onerous requirements to enroll and maintain benefits.
- Backdoor tax surprises on loan forgiveness in current law should be eliminated.
- Automatic renewal systems, instead of the current annual recertification process, would prevent borrowers from accidentally losing their repayment plan benefits.
- Public Service Loan Forgiveness (PSLF) can be made proportional for each year of service.
- Allow Federal Family Education Loans (FFEL) to qualify for PSLF.
Consumer Protections and Student Loan Servicer Accountability
Extend consumer protections to all student loan borrowers, ensuring servicers are properly held accountable.
- Consumer protection measures include:
- Extending the protections that federal borrowers enjoy to private student loan borrowers, including caps on interest rates, flexible repayment options, and certain cancellation rights;
- Cracking down on private student loan “relief” companies;
- Ending Social Security offsets for recipients with defaulted student loans;
- Providing more efficient teach-out programs for defunct for-profit colleges and immediate loan forgiveness to victims of closed/sold colleges or those under investigation.
- The servicing companies the Department of Education currently contracts with too often contribute to the student debt crisis.
- Student loan servicer accountability measures include:
- Cutting contracts with lawbreaking servicers;
- President Obama’s Borrowers Bill of Rights;
- Providing a private right of action against loan servicers.
Restore Bankruptcy Protections
Restore bankruptcy protections by limiting exceptions and removing the undue hardship rule.
- Under current bankruptcy law, discharging student debt is almost impossible.
- Loan modification options and bankruptcy protections for all student loans, including private loans, would alleviate a major burden for struggling or insolvent borrowers.
- Provisions of the 2005 bankruptcy code, which were more consumer friendly, can be restored to allow easier discharge of student loan debt.