More and more US students leave university with heaps of depths caused by student loans. This is due to the fact that it is not always guaranteed that students find a well-paid job after graduation to re-pay their depths. Therefore Consumers Union calls for cooperation to work with private student lenders to make flexible repayment plans and refinancing options available to borrowers.
Currently private student loan takers do not have the same rights in the form of deferments, forbearances, or flexible repayment plans such as income-based repayment (IBR) and the Pay-As-You-Earn program.
The proposal calls for:
- Flexible income-based re-payment options for private lenders to borrowers. In case of financial hardship, due to high debt balances and modest wages, borrowers should be allowed to repay a reasonable percentage of their income in order to stay current.
- Various refinancing options when borrowers demonstrate a pattern of responsible behaviour to have the opportunity to shop around for lower interest rates as they become available.
These recommendations are part of a broader set of student loan reforms that Consumers Union has urged Congress and regulators to adopt.
For more information:http://defendyourdollars.org/document/seven-principles-for-fair-student-lending and http://defendyourdollars.org/wordpress/wp content/uploads/2013/04/CFPB_comment_private_-loans_4_13.pdf
Source: Consumers Union