By Owen Daugherty, NASFAA Staff Reporter
Private student loan borrowers could see some targeted debt relief as part of a defense spending bill currently making its way through Congress.
Borrowers with private student loans who have a permanent or total disability could see their debts automatically discharged as the House this week passed an amendment that is structured similarly to the protection available to federal student loan borrowers.
The measure was advanced on a largely party-line vote as an amendment to the National Defense Authorization Act (NDAA). The defense spending bill is expected to be voted on by the House this week before going to the Senate.
The amendment put forward by Rep. Madeleine Dean (D-Pa.) would mandate that private lenders be required to forgive the debts of borrowers who die or become totally and permanently disabled. Any cosigners on the loan, generally parents or other family members, would also be relieved of having to repay.
“This amendment would right a wrong and bring parity between protections for private student loan borrowers and federal student loan borrowers,” Dean said on the House floor during debate over the amendment.
All but four Republicans voted against the inclusion of the amendment. Rep. Virginia Foxx (R-N.C.), the ranking member on the House Committee on Education and Labor, argued the private student loan industry already has mechanisms in place to forgive loans.
“All this amendment would do is waste valuable time to create a government mandate for a feature already commonplace in the industry,” Foxx said.
The Consumer Bankers Association, a group representing many private student lenders, in a post on Twitter said lawmakers did not have an opportunity to discuss the amendment in a hearing before voting on the measure.
“We're urging House leaders to give these proposals a reasonable review before tacking them onto an unrelated bill,” the group wrote. “Especially when the real crisis is a federal student debt crisis.”
Another amendment that would have afforded borrowers with private student loans the ability to pause payments and interest accrual through the end of January — mirroring the forbearance in place for federal student loans — was not included in the final defense policy bill. Sponsored by Rep. Alma Adams (D-N.C.), the amendment was cleared for floor consideration by the rules committee earlier this week but was not presented on the House floor Thursday as the chamber was set to vote on the NDAA.
The measures related to private student loans come as the Biden administration in the past year has provided significant relief to borrowers with federal student loans, most notably extending the payment pause and interest freeze for federal student loans, and clearing nearly $10 billion in student loans through existing federal programs such as the Total and Permanent Disability (TPD) program and borrower defense to repayment claims. However, those with private student loans have seen little relief amid the pandemic as the administration and Department of Education (ED) have limited ability.
Publication Date: 9/24/2021