Over 43 million Americans currently have student loan debt totaling approximately $1.75 trillion.
For borrowers who fall behind, the damage to their credit ratings can prevent them from buying a house, a car, or even finding a job.
A group of House Democrats are proposing three bills focused on repairing the credit histories of federal borrowers who fell behind and then worked to pay off their debt.
>>Report: White House to extend pause on student loan repayments through August 31
“Once you’re out of default, that default stays on your credit report, but it shouldn’t because you’ve done your part,” said Rep. Nikema Williams (D-GA), co-sponsor bills. “This legislation is common sense. This will remove that flaw once you get up to speed and give you a chance to compete in an economy where you need a high credit score to buy a house to buy a car.
The Clean State Through Consolidation Act would remove default records from the credit history of federal student loan borrowers who have consolidated their defaulted loans.
The Clean Slate Through Repayment Act would remove any adverse credit history related to a defaulted federal student loan once the borrower has paid off the balance in full.
Finally, the Student Loan Rehabilitation and Credit Improvement Act would remove negative credit reports on a federal loan in default once the borrower completes student loan rehabilitation.
“The debt is too high,” said Rep. Alma Adams (D-NC), another co-sponsor of the proposals. “We have turned colleges and universities into another barrier that keeps middle-class families away.
>> 8-year-old child killed, 2 seriously injured in accident involving car and garbage truck in Miami County
The push comes as congressional progressives urged the Biden administration to reverse student loan debt forgiveness for millions of borrowers.
But there are questions about whether the president even has the power to do so or whether it has to be an act of Congress.
Cancellation of student loan debt also faces strong opposition from Republicans.
“I don’t think we should be asking those who didn’t go to college to pay tabs for those who did,” Sen. Chuck Grassley (R-IA) said during a hearing in August 2021 on student loan debt. “Debt cancellation would be highly regressive and massively benefit the wealthy at the expense of others.”
Starting May 1, the pandemic pause on federal student loan repayments will end and borrowers will have to start making payments again.
©2022 Cox Media Group