WASHINGTON – Senator Tom Harkin (D-IA), Chairman of the Senate Committee on Health, Education, Labor and Pensions (HELP), issued the following statement after the Consumer Financial Protection Bureau and the U.S. Department of Education released a report today illustrating the misleading practices and debt that stemmed from the financial boom and bust of the private student loan market over the last decade:
“With student loan debt at a record level, we must empower students and families to make informed decisions about how they finance their college education. This is particularly important when it comes to high-risk and high-cost private loans, which can quickly sink students into financial quicksand.
“Today’s report underscores the need for legislation I have sponsored in the Senate to educate students about their federal financial aid options before they turn to private student loans, which could lower default rates and curb unnecessary debt. It also highlights the need to provide relief to students by making private loans dischargeable in bankruptcy again just like all other forms of private debt, which pending legislation I’ve cosponsored would accomplish.
“The findings in this report are especially troubling for students attending for-profit colleges, who are many times more likely to take out private loans than other students. As Chairman of the HELP Committee, I will carefully examine the report’s recommendations and will continue to work hard to improve college affordability and address the student debt that burdens America’s middle class families. Ensuring that students exhaust their federal aid options before turning to private loans would be a good first step.”