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With the midterms in the rearview mirror, you may be wondering what, if any, changes may be coming from the upcoming new congress.
Student loan debt now makes up the second largest debt sector, with only mortgage debt outpacing it, it’s not surprise the student borrowers are wondering what potential changes or advantages that may be coming from the upcoming leadership changes in the house. The current administration is not viewed as one friendly to current borrowers, and by extension, the current congress has left most borrowers looking for a friendlier legislative body.
Here are some of the possibilities:
This may be the largest and most welcomed change for borrowers. With Democrats now in charge of oversight committees, you can expect the Department of Education to be held to tougher standards that are more borrower friendly.
You may also see a push from states going after deceptive lender practices as well. While increased oversight may not always be the best outcome for every situation, most will agree that protections are needed to prevent gross negligence.
The current administration wants to include more of the private sector in the student loan industry, and it may be possible that a deal is struck to offer more options and competition, which theoretically may drive down costs. While this often touted line is overused, it’s always nice to have options. The key sticking point may be some of the protections that federally backed loans provide carrying over to the private sector. This is one of the big sticking points that many point to currently when borrowers look to refinance federally backed loans. In these cases, even if you may get a lower interest rate, you lose all of the other protections that come with federal loans such as long term deferment, forbearance and income based repayment options.
One of the more hotly debated topics when it comes to student loans is the loan forgiveness program. While borrowers love these programs, they leave federal taxpayers on the hook. While many have no problem with this investment in our society’s future, Betsy DeVos, the current Education Secretary appears to have a more muted view of the program. This could lead to big changes or doing away it the program altogether.
While nobody knows for sure what the future congress brings to the table, I think it’s safer to say that most would agree that a more borrower friendly congress (at least in the House) will take the reins early next year.