Durbin Statement on Administration's Efforts to Help Students Manage Loan Debt
[WASHINGTON, D.C.] – US Senator Dick Durbin (D-IL) released the following statement today after President Obama announced new steps to make college more affordable and make it easier for students to repay their federal student loans:
“Today’s announcement by President Obama is welcome news for the millions of students and recent graduates who are struggling to pay off their student loans. Plans to cap monthly payments, provide greater access to loan repayment programs, aid in the consolidation of student loans and to provide students with more information about financial aid before they go into debt are all important steps to help students manage the skyrocketing costs of getting a degree.”
“For a growing number of students, this help may not be enough. Students in some for-profit schools are increasingly burdened with massive debt and little to show for their education. Meaningful accreditation standards and safe guards for taxpayer investments need to be put in place to ensure students are getting the best education possible and federal funds are being used fairly and responsibly.”
“Finally, as prices skyrocket, students, especially those at for-profit schools, who find themselves unable to get enough government aid to pay their high tuition, are turning to private loans to fill the gap. These loans need to be carefully regulated to protect students and their families from unreasonable terms and rates.”
Background on President Obama’s Announcement Today:
The President’s plan would allow borrowers to cap their student loan payments at 10% of discretionary income as soon as next year. The Administration estimates that this cap will reduce monthly payments for more than 1.6 million student borrowers.
The President’s plan would also provide help for those already in the workforce. Over 36 million Americans have federal student loan debt but less than 450,000 participate in income-based repayment programs.
Consolidation of federal student loans, also part of the President’s plan, would help students with multiple loans consolidate terms and conditions into a single monthly payment. Borrowers who take advantage of this program could receive a reduced interest rate.
Finally, the Administration announced that the Consumer Financial Protection Bureau and the Department of Education will launch a “Know Before You Owe” project designed to provide prospective borrowers with as much information as possible about student loans, helping them make better and more informed decisions about the student loan process.
Background on Durbin’s Efforts on For-Profit Colleges:
Durbin has also been a leading critic of some of the practices of for-profit colleges around the country. In February, he called on the leaders of over 300 colleges and universities to become ‘better stewards of taxpayer dollars’ by doing more to ensure those investments are matched with student achievement. Durbin called on schools to make certain students are completing degrees and gaining useful knowledge, not just piling up mountains of student loan debt. He has also called for better accreditation standards and an industry wide code of conduct.
Background on Durbin’s Efforts to Help Student’s Discharge Private Loans in Bankruptcy:
Earlier this year, Durbin introduced the Fairness for Struggling Students Act which will restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt. Before changes were made to the bankruptcy code in 2005, only government issued or guaranteed student loans were protected during bankruptcy. This protection has been in place since 1978 and was intended to safeguard federal investments in higher education. Durbin’s bill would restore the bankruptcy law, as it pertains to private student loans, to the language that was in place before 2005, so that privately issued student loans will once again be dischargeable in bankruptcy.
More information about Senator Durbin’s efforts on behalf of students can be found here.