WASHINGTON—Today, Senator Tom Harkin (D-IA), Chairman of the Senate Committee on Health, Education, Labor, and Pensions (HELP) Committee, joined by Senator Barbara Mikulski (D-MD) and nine other Senators, introduced the Smarter Borrowing Act, a bill to protect and empower student loan borrowers with effective loan counseling. Last year, student loan debt topped $1 trillion, surpassing credit card debt for the first time. By improving the timing and quality of loan counseling, this bill will ensure that students are better prepared to avoid taking on burdensome debt and help them manage repayment once they’re out of school.
“College degrees are becoming increasingly important for Americans to compete in the global economy, but their cost is burdening workers far beyond their college years,” Chairman Harkin said. “In Iowa and around the country I hear from college students and parents with unmanageable debt who wished that they had better information about their options before taking out student loans. Too much student loan debt forces young people to delay important investments in their future, like buying a home, saving for retirement, or building a college fund for their kids—and only in extremely rare cases can this debt be discharged through bankruptcy. Our bill will help students navigate the student loan process, from beginning to end, so there are no surprises after graduation.”
“I believe in America’s opportunity ladder, and higher education is an important rung on that ladder,” Senator Mikulski said. “This bill will make sure that our students have the help and counseling they need to manage their student loans. College is part of the American dream, it shouldn’t be part of the American financial nightmare.”
The legislation strengthens and reforms the current mandatory entrance and exit loan counseling requirements for federal student loans and notifies students annually of their cumulative debt including their remaining eligibility for loans and grants. The bill offers additional consumer protections and requires high-risk institutions to provide additional counseling.
“The Smarter Borrowing Act will help students and parents make more informed and smarter decisions about borrowing and repaying federal education loans by improving the timing, quality and effectiveness of entrance and exit counseling. By increasing student and parent awareness of their federal education loans, this legislation will enable and encourage them to borrow less and avoid getting overextended. By increasing awareness of repayment options, this legislation will help reduce delinquency and default rates,” said Mark Kantrowitz, financial aid expert.
In addition to Senators Harkin and Mikulski, the Smarter Borrowing Act is cosponsored by Senators Murray, Franken, Warren, Blumenthal, Sanders, Rockefeller, Durbin, Lautenberg, and Murphy.
The Smarter Borrowing Act is supported by: American Association of Community Colleges, American Association of University Women, American Federation of Teachers, Consumer Action, Consumers Union, National Association of Consumer Advocates, National College Access Network, National Consumer Law Center (on behalf of its low-income clients), National Consumer League, National Direct Student Loan Coalition, National Education Association, The Education Trust, The Institute for College Access & Success, US Public Interest Research Group, United States Student Association, and Young Invincibles.
For more information on the Smarter Borrowing Act, click here.