The Biden administration canceled the Trump-era student loan policy that prevented state governments from addressing federal student loan servicing issues, according to Department of Education (DOE) press release on Monday…
The move will allow states to enforce Bills of Rights and similar laws in the hopes of “increasing oversight and accountability for student loan servicers to protect students, borrowers and taxpayers.” Twelve states and the District of Columbia have already passed student loan eligibility bills.
The latest guidance from the Department of Education takes effect this week, allowing state governments to regulate and take action against predatory or fraudulent student loan servicers on behalf of borrowers within their state.
“Helping more students get college education is a top priority, and effective collaboration between the states and the federal government is the best way to ensure that student loan borrowers receive the best possible service.”
Most student loan borrowers are unlikely to feel the immediate impact of this guide, but the DOE’s decision is designed to help identify and prevent future predatory student loan practices. Keep reading to learn more about what states are doing to protect student loan borrowers and what that means for your college debt.
If you are looking to borrow private student loans or refinance your current student loans, visit Credible to compare your options…
What is Student Loan Eligibility Law?
The Borrower Bill and other state-level student loan service laws are designed to protect consumers from the predatory lending practices that trap college graduates in debt. 12 states currently have student loan eligibility bills in place, including:
Depending on where you live, student loan eligibility bills can help you avoid defaults, stop withholding wages, resolve billing disputes, stop harassment from debt collectors, and apply for layoffs. A ruling passed this week by ED gives states more authority to enforce such measures.
“The states have long played an important role in overseeing higher education and are at the forefront of protecting student borrowers from fraud and abuse,” Massachusetts Attorney General Maura Healy said in a statement. “We applaud Secretary of State Cardone for rejecting a previous interpretation that misrepresented state power and emboldened bad players.”
While state governments can help you study the terms of repayment, you have other repayment options. You can apply for hassle relief on your federal loans or even refinance your private student loans.
Explore student loan interest rates and refinancing rates from real lenders in the table below. You can see the approximate student loan rate on Credible without affecting your credit rating.
What to do when you fall prey to predatory lending practices
Nearly 45 million Americans over $ 1.7 trillion in student debtand many of them will end up paying thousands of percent by the time they pay off their loans. Worse, many borrowers remain unpaid and may even be sued for outstanding student loan debt.
If you think your lending institution is engaging in a predatory practice of student lending, check your state’s laws to explore your options. You can contact your state attorney general to file a complaint and discuss the best course of action.
You may also be eligible for repayment of your federal student loans. if your school is closed while you are enrolled, or if the school has misled the value of your degree. Visit the Federal Student Aid (FSA) website to learn more about borrower protection program and other federal remedies.
Borrowers of private student loans may consider refinancing their loans to a new student loan lender. Refinancing a private student loan can also provide you with a higher interest rate, which can lower your monthly payment and help you save money over the life of your loan. You can compare lenders of private student loans on Credible.
Have a financial question but don’t know who to contact? Write to a safe money expert at email@example.com and your question can be answered by Credible in our Money Expert column.