11.28.16

Scott, Bonamici Lead Efforts to Protect Student Loan Borrowers, Reduce Default Rates

WASHINGTON – Today, Representative Bobby Scott (VA-03), Ranking Member of the House Committee on Education and the Workforce, Representative Suzanne Bonamici (OR-01) and other Committee Democrats sent a letter to the Department of Education urging it to protect struggling student loan borrowers from defaulting on their debt by improving access to income-driven repayment plans.

The letter encourages the Department to simplify the transition from loan rehabilitation to affordable repayment plans for borrowers with previously defaulted loans. It also asks the agency to revise its payment contracts with debt collectors to promote the long-term economic well-being of borrowers with defaulted loans. The letter follows a report last month from the Consumer Financial Protection revealing that many borrowers who have previously defaulted are likely to default again because they face barriers to enrolling in repayment plans with affordable monthly payments. 

“The high rate of re-default reveals a breakdown in the transition from rehabilitation to repayment and underscores the need to do more to connect at-risk borrowers with income-driven repayment plans,” the Members wrote. “The failure to match borrowers with repayment options best suited for their financial situation, during both initial repayment and repayment following rehabilitation of defaulted loans, contributes to delinquencies and defaults and can cause long-term financial harm to borrowers.”

“Giving borrowers the option to automatically certify eligibility for income-driven repayment plans would make it much easier for them to continue making affordable payments,” the letter reads. “For low-income borrowers with rehabilitated loans, an automatic-recertification process would go a long way toward preventing re-default. This solution has bipartisan support in Congress, and we urge the Department to work together with the Internal Revenue Service to develop an automatic recertification process without delay.”  

As Congress works to reauthorize the Higher Education Act, Committee Democrats are committed to advancing policies that protect borrowers from defaulting. Committee Democrats will seek to enact proposals that simplify repayment programs and result in lower default rates and more manageable payments for borrowers. These actions will help student loan borrowers understand statutory protections that will help them repay their loans and avoid the negative consequences of delinquency and default.

The full text of the letter can be found here. 

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Press Contact

Arika Trim (Scott)

(202) 226-1956

Maggie Rousseau (Bonamici)

(202) 754-1649