Democratic lawmakers at a House hearing yesterday pushed for tougher oversight of companies handling student loans, The Hill reported. The hearing before the House Financial Services Subcommittee on Oversight and Investigations addressed what critics say is predatory behavior within the $1.5 trillion student loan servicing market. Democrats pushed for Congress to impose responsibilities so that loan servicers must provide better advice to student borrowers. Under current Department of Education rules, federal student loan servicers are not legally obligated to inform borrowers which loan repayment plans are most beneficial for them. But Republicans balked at new regulations. Rep. Warren Davidson (R-Ohio) raised concerns about Congress imposing new responsibilities on servicers without safeguards to protect them from defaults. Lawmakers also addressed the obstacles women or minority student borrowers face that lead to higher default and late repayment rates. GOP lawmakers, including Reps. Barry Loudermilk (Ga.) and Bryan Steil (Wis.), though, said many of the problems with student loans stemmed from the high costs of higher education, not the practices of loan servicers. Read more.
The issue of student loan debt and bankruptcy is the first problem addressed in the Final Report of the ABI Commission on Consumer Bankruptcy. Click here to download your copy.
