CHICAGO –(ENEWSPF)–August 15, 2016. U.S. Senator Dick Durbin (D-IL) and Illinois Attorney General Lisa Madigan today called on the U.S. Department of Education to improve protections and benefits for student borrowers by strengthening student loan servicing. They also called for the passage legislation that would allow current federal borrowers to refinance their loans at lower interest rates and allows private borrowers to refinance into federal loans.
Durbin and Madigan have long advocated for increased protections for student borrowers and supported legislation to make it easier for millions of working families to manage the student loan debt they already have. Student loan debt has tripled over the last decade with more than 40 million borrowers owing about $1.2 trillion on their student loans.
“Unlike previous generations of college graduates, me included, who could borrow a reasonable amount to finance their college education, this generation of college graduates start out with nearly $30,000 in debt on average. And, it’s no surprise, many are struggling to repay it,” Durbin said. “We need to ensure that repaying those loans isn’t unnecessarily difficult either because of the amount they’re taking out or simply because the process of repaying and their servicer makes it too burdensome and frustrating. I’m hopeful that in the coming months, we will start to see both of those things change for the benefit of student borrowers.”
“My investigations into thousands of student loan borrowers’ repayment problems revealed bad practices and repeated abuses by student loan servicers that hurt borrowers,” Madigan said. “Student loan borrowers need information on the many repayment options available to them. More consumer protections and clear student loan servicing standards are overdue so that borrowers can help pay back their loans and build successful lives.”
“We’ve heard from thousands of young people struggling to make ends meet even as they fight to stay current on their monthly student loan payments. A survey we conducted last year revealed that fifty-four percent of respondents believe that their servicer has made it more difficult to repay their student loans — this shouldn’t be the case for students who want to work with servicers to pay back their loans,” said Eve Rips, Young Invincibles’ Director of Regional Strategy. “We must do everything we can to make it easier to pay loans back, not harder. That’s why we stand with Senator Durbin and fully support these bills to ensure that we address two very significant barriers to financial security and economic opportunity for our generation. ”
The U.S. Department of Education is currently working on a major overhaul of the student loan servicing process with the contractors that handle the repayment of federal student loans. The Department has put forward a set of servicing principles that are based on protections in Durbin’s Student Loan Borrower Bill of Rights – legislation to provide basic rights to federal student borrowers.
The Student Loan Borrower’s Bill of Rights provides six basic rights for all federal and private student loan borrowers:
- The right to have options such as alternative payment plans to avoid default.
- The right to be informed about key terms and conditions of the loan and any repayment options to ensure changing plans won’t cost more.
- The right to know your loan’s servicer and who to reach out to when there is a problem.
- The right to consistency when it comes to how monthly payments are applied. Lenders and servicers should also honor promotions and promises that are advertised or offered.
- The right to fairness, like grace periods when loans are transferred or debt cancellation when the borrower dies or becomes disabled.
- The right to accountability, including timely resolution of errors and certification of private loans.
Durbin has co-sponsored legislation to allow current student loan holders to refinance to a lower interest rate, lowering payments by hundreds or thousands of dollars a year for potentially millions of borrowers. The Bank on Students Emergency Loan Refinancing Act would allow current federal borrowers to refinance their loans at federal interest rates available this academic year and allows private borrowers to refinance into federal loans. The ability to refinance could help an estimated 1.3 million of the 1.7 million Illinoisans with student loan debt. Republicans have blocked Democratic efforts to bring the bill to the floor in the past.