New Principles for Fair Student Lending

November 13, 2013
Fox Business 
student loan news

Most forms of consumer debt have shrunk since 2008, but student loan debt is still growing, creating potential long-term economic effects such as delaying investments and big-ticket purchases. The marginal reforms made in the last few years have not alleviated the $1 trillion of outstanding student loan debt.

Consumers Union on Nov. 13 released a new report, "Degrees of Debt: Stories from Student Loan Borrowers Highlight Urgent Need for Reform," featuring consumer stories that illustrate some of the biggest problems that need reform. In the Pacific Northwest, for example, a 64-year-old man has paid down his student loan for nearly 20 years but will still be making monthly installments until age 84; and a woman in Illinois is locked into a 6 percent interest rate after consolidating her loans. The report also proposes a policy agenda that incorporates "Seven Principles for Fair Student Lending," including loan transparency, financing options, flexibility in repayment, reasonableness in how fees and payments are applied to the loan, accountability that allows borrowers to have inquiries and disputes resolved in a timely fashion, fairness, and relief to keep them from being saddled with lifelong debts that cannot be effectively rehabilitated or discharged.

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