Student loan debt remains the second largest category of US debt
WASHINGTON, DC – Extensive debates over emergency coronavirus funding and the future of the Supreme Court have left little time for other legislative matters. Before the pandemic, Democrats and Republicans engaged in strong debates about how to help a vulnerable population – student loan borrowers facing debt, America’s second largest category of consumer debt.
“At almost every turn, you see people getting ripped off by predatory student loan companies, from big banks to petty scams, to debt collectors, to service agents, to lenders,” said Seth Frotman, founder of Student. Borrower Protection Center in an interview at his office earlier this year.
Frotman is so passionate about this crisis that he quit his job at the Consumer Financial Protection Bureau in 2018, claiming, among other things, that the Trump administration was working to hide a report that detailed how banks were passing unnecessary fees on to student borrowers. . The administration argued that it had cut Frotman’s group down for efficiency and had not commented widely on his resignation at the time. Frotman is now advocating for new industry-wide rules to protect borrowers through his nonprofit.
“Student loan borrowers have fewer rights and less protections than almost any other type of person in debt. If you have a mortgage, have a credit card, and something’s wrong, you’re covered. If a company tries to rip you off, you have rights and the ability to hold them accountable. A lot of these protections don’t exist for student loan borrowers, ”Frotman said.
“The student loan debt crisis is often described as a mistake. How did it happen ? But there are no multibillion dollar errors. We are in the mess we are in because there are decisions at the federal level, at the state level, that have left millions of American families with over a trillion dollars in debt, “he said. added.
Some of the legislation Frotman supports includes the Fair Student Loan Debt Collection Practices Act which would prohibit a debt collector from collecting federal student loan debt owed by a borrower earning less than a certain income. The bill has not moved forward.
Congressman Brett Guthrie of Bowling Green, Ky., Has introduced bills in recent years that would strengthen loan counseling requirements for higher education institutions participating in federal aid programs to students, but Frotman says bad advice isn’t the central problem.
According to the Brookings Institution, nearly 40% of American student borrowers will default on their loans by 2023.