Report Shows Student Loan Debtors "Too Small to Help"
The National Consumer Law Center released this report (PDF) insisting that the federal government and lenders do more to help borrowers struggling to pay back expensive private student loans.
Private student loans are usually more costly and riskier than federal loans (see a comparison here), and private loan volume is soaring.
The NCLC report contains the following recommendations:
- The federal government must require that lenders and servicers provide relief by offering private student loan borrowers loan restructuring and repayment flexibility.
- Congress must restore the rights of financially distressed borrowers to discharge private student loans in bankruptcy.
- Existing private loan obligations should be canceled for students who signed up for unlicensed, unaccredited schools that closed or are currently in bankruptcy.
- More stringent regulations should be imposed on the private student loan market, including:
- underwriting standards that limit loan availability only to borrowers likely to be able to repay, and
- restrictions on fees and interest rates.