This Week In Washington
This week, the Senate began debate on S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act. If adopted as amended, the bill would provide some protections for student loan borrowers, including protections to cosigners and student borrowers if one or the other passes. It would also allow private loan borrowers to remove defaults from their credit report if they successfully complete the creditor’s loan rehabilitation program. And finally, it would direct a commission to produce some ‘Best Practices’ for institutions regarding increasing financial literacy for students.
This bill is not primarily about student loans; however, senators have used this legislation as a vehicle to get some student loan borrower protections included. Several Democrats have offered numerous amendments, which would do everything from make Public Service Loan Forgiveness a scaled forgiveness plan to prohibit arbitration agreements between students and private lenders. This bill is expected to pass the Senate next week, but its future in the House is far less certain. We will keep you abreast of any changes to student loan programs if this bill becomes law.
Also this week, a report from the Office of Inspector General (OIG) in the Department of Education (ED) became public, and the report outlined several concerns the office had with the Republican crafted rewrite of the Higher Education Act (HEA), called the PROSPER Act. The OIG criticized the proposed elimination of the Direct Loan program because the bill did not “provide sufficient information on the operation of a new direct loan program for the OIG to evaluate its impact.” The OIG has concerns about evaluating the cost of a new program and notes ED needs to be more transparent in its assessment of potential costs. The OIG also disparaged several aspects of the PROSPER Act, including the reduction of accountability by the bill’s attempt to eliminate the 90/10 rule that restricts federal aid to for-profit schools and the Obama-era ‘Gainful Employment’ regulations.
As the Senate works on its HEA reauthorization bill, visit our #MakeTheCase advocacy site for tips and tools to help you get involved and call your Senators today! Recall, the House education committee passed its version of the HEA late last year. Its bill, known as the PROSPER Act, proposes to place an annual cap on graduate student loans at $28,500, eliminate the Public Service Loan Forgiveness (PSLF) program, and terminate time-based forgiveness for borrowers enrolled in income-driven repayment plans. Read our full summary of the bill and our statement calling for substantial improvements to be made.
News You Can Use
Some borrowers are facing monthly student loan bills even though they should be in forbearance while they await judgment from the Department of Education on their borrower defense to repayment application.
The banking industry wants the federal government to establish caps on how much graduate students and parents of undergraduates can borrow to cover tuition.
No student aid-related bills were introduced this week for consideration by the 115th Congress. However, an amendment to the bill mentioned above was introduced this week.
S. 2155 – Economic Growth, Regulatory Relief, and Consumer Protection Act [Sen. Mike Crapo (R-ID)] would change some banking regulation enacted under Dodd-Frank, and it would provide private student loan borrowers some additional rights regarding bankruptcy, death, and default.