The House next week will try to fend off a growing pile of student loan debt — now at $1.4 trillion — by passing legislation requiring families to learn more about what it means to borrow tens of thousands of dollars for college.
Republicans have scheduled a vote on legislation from Reps. Brett Guthrie, R-Ky., and Suzanne Bonamici, D-Ore., called the Empowering Students Through Enhanced Financial Counseling Act.
The bill doesn’t restrict borrowing, but it’s aimed at forcing students and parents to understand the extent of the loans they’re taking on. It’s a first step at putting a check on the growing pile of student debt that some say could spark the next financial crisis.
“Our country is facing a student debt crisis,” Guthrie said last year when he introduced his bill last year. “Part of fixing the problem is ensuring that student borrowers grasp the extent of their financial obligations.”
Next week’s vote may help Republicans tame another potential problem — that Democrats will argue Republicans are doing nothing, and use the crisis to win votes in the midterm elections in November. Several Democrats, including socialists like Alexandria Ocasio-Cortez of New York, have responded to rising student loan debt by proposing tuition-free college for all.
The vote will also come just days after the student loan watchdog at the Consumer Financial Protection Bureau unexpectedly resigned. Seth Frotman, who was at the CFPB since 2016, said the agency’s acting director, Mick Mulvaney, ” abandoned” families that borrow money in favor of large corporations, and hid evidence that banks are overcharging students for loans.
“When new evidence came to light showing that the nation’s largest banks were ripping off students on campuses across the country by saddling them with legally dubious account fees, bureau leadership suppressed the publication of a report prepared by bureau staff,” Frotman wrote.
Today, loan counseling is required before families take out a student loan, but usually the advice ends there. Under the bill up for a vote next week, borrowers would get counseling each year to go over their financial situation.
It would also require borrowers to consent to loan installments each year, and require the Department of Education to create ways to provide more counseling about the status of every borrower’s situation.