U.S.
Senator Sherrod Brown
Making
Student Loan Policies Clear for Ohio Students
A
death within a family is devastating. Grieving family members deserve
time to mourn their loss. But some parents who have co-signed a
private student loan for their child have instead found themselves
facing harassment from student loan servicers.
After
Delphos, Ohio native Andrew Katbi was killed in a tragic car crash
just weeks before graduating from law school, his family experienced
this mistreatment firsthand.
Upon
learning of Andrew’s death, two of his student loan servicers
forgave his debt, but one, despite having a policy that stated it
would forgive loans in the case of death, aggressively pursued
Andrew’s mother, who had co-signed for the loans. It took the
efforts of Andrew’s sister, Olivia, who began a social media
campaign to raise awareness about this practice, to make the servicer
abide by its own policy.
It is
my hope that all student loan servicers will choose to forgive debt
in the case of death but, if they won’t, borrowers and co-signers
deserve to know before they sign. Most borrowers and co-signers are
unaware that they could be liable for the full value of student
loans, even if the borrower or co-signer passes away. To ensure that
families can make informed decisions when taking out private student
loans, I am joining my Senate colleagues to introduce legislation
that would require private student lenders to clearly outline their
policy on repayment in the event that a borrower or co-signer dies or
becomes severely disabled. In a situation like the Katbis’, these
clear disclosures would help borrowers and regulators hold servicers
accountable.
Last
week I chaired a hearing in the Senate on the need to improve student
loan servicing. There’s nearly $1.2 trillion in outstanding student
loan debt in the United States. That’s more than the United States’
credit card debt or auto loans. With nearly seven million borrowers
in default, student loan servicers need to work to modify eligible
borrowers’ loans and enroll them in income-based repayment plans.
Earlier this month, President Obama issued an executive order that
will ensure that five million borrowers pay no more than 10 percent
of their income each month on student loan payments. That’s a good
start, but we must do more to ensure that borrowers have reasonable,
affordable repayment plans. What we’re seeing instead are practices
such as allocating borrowers’ payments so they’ll have more late
fees, making it difficult for service members to activate their
military benefits, and limiting access to loan modification programs.
We need strong oversight to ensure that student loan servicers aren’t
taking advantage of borrowers.
Grieving
families shouldn’t face the added burden of debt collection calls.
Congress must take action to protect student loan borrowers and hold
servicers accountable for their actions.
Sincerely,
Sherrod
Brown
U.S.
Senator
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