Student loan news shows Congress is considering reauthorizing the Higher Education Act which is the principal law governing federal student loans. The reconsideration would allow policymakers the chance to evaluate legislation and programs.
Here’s a quick review of the legislation and how it would affect student loan borrowers currently enrolled and borrowers who have graduated:
- Federal Student Loan Refinancing Act: Under this bill, existing and potentially future student loan borrowers with student loan interest rates above 4 percent would have the opportunity to refinance their government student loan into fixed 4 percent loans.
- Simplifying Access to Student Loan Information Act: This act will reinforce dissemination of information on private loans and to give students access to and better knowledge of debt and repayment options.
- Protect Student Borrowers Act:This proposal is targeted at borrowers who are in and out of college and those college bound. It places some accountability on colleges and university and sees them paying an amount of what their defaulted student borrowers owe. Colleges can reduce their fines by developing and encouraging responsible “student loan management plans”.
- Student Loan Fair Prepayment Act: This proposal would require extra student loan payments, known as prepayments, first applied to the principal of the loan with the highest interest rate, unless the borrower requests otherwise.
- Student Loan Borrower Bill of Rights:This bill is meant to create awareness, transparency and better understanding of disclosure requirements and protections and would require notifications to borrowers throughout the loan and repayment process.
These legislations, if put into action, would significantly change the interest, payments and balances over the course of the student loan borrowers loan and are meant to reduce deferment rates, default and forbearance.