WASHINGTON – Today, during a House Financial Services Committee markup, Congresswoman Ayanna Pressley (MA-07) introduced H.R. 3621 – The Student Borrower Credit Improvement Act, legislation to provide much needed support to private student loan borrowers with a pathway to financial stability by helping them improve their credit. The Student Borrower Credit Improvement Act would provide key reforms to help borrowers struggling to repair their credit, including the establishment of a credit rehabilitation process for borrowers.
Student loan debt in the United States today exceeds credit card debt, auto loan debt, and is the second highest form of consumer debt, behind mortgage debt. In 2018, nearly $120 billion of outstanding student loan debt was a result of private student loans.
The amendment was reported favorably out of the committee.
Congresswoman Pressley’s remarks as prepared for delivery are below.
Thank you, Madam Chair and thank you for conducting this markup today.
My bill H.R. 3621- The Student Borrower Credit Improvement Act will provide much needed assistance to struggling private student loan borrowers.
Student debt is now the second highest form of consumer debt. Trailing only mortgages, student debt impacting nearly one-sixth of the total U.S. population above the age of 18.
Throughout the Commonwealth, including my district, the Massachusetts 7th, over 855 thousand borrowers owe a total of $33.3 billion.
But what’s missing in all these numbers and statistics are the people.
The teachers, the nurses, the veterans and seniors. Anyone attempting to improve their lives and give back to their communities and their country through a higher education.
My bill will help those borrowers who had to resort to private student loans—one of the riskiest ways to finance a college degree because these loans lack important consumer protections and repayment options. Private student loans make up nearly 10% of the total outstanding student debt. And unlike federal student loan borrowers, these borrowers are oftentimes left without a pathway to financial stability during hard times.
And we know that sometimes, life happens. Some may still struggle to meet these requirements due to extenuating circumstances.
For the low-income borrowers who fall behind on their loans —due to a lost job, a medical emergency– the result could be catastrophic for their credit.
Even if we were to forgive all student loans tomorrow, borrowers with derogatory marks on their credit would still be left waiting 7 years for a clean slate!
This is a process that we could, no, must put in place NOW.
My bill, the Student Borrower Credit Improvement Act would establish processes that mirror the protections granted to delinquent or defaulted federal student loan borrowers. It provides flexibility for borrowers who may be experiencing significant financial distress, servicemembers who’ve been deployed, and those who live in an area impacted by a natural disaster and may not be able to work.
Notably, borrowers who have made 9 of 10 consecutive payments on their loan, would be eligible to have derogatory marks removed from their credit profile.
Once these requirements are met, CRAs would be required to take off any and all negative marks related to the private student loan from the person’s credit profile.
My bill will help us get one step closer to establishing parity among borrowers and a credit reporting system that works for people when they need it most.
Thank you and I yield the remainder of my time.