Democratic Senator Dick Durbin and Sens. Jack Reed (D-R.I.), Elizabeth Warren (D-Mass.), Patty Murray (D-Wash.), Sherrod Brown (D-Ohio) and Richard Blumenthal (D-Conn.) have proposed an amendment to the Economic Growth, Regulatory Relief and Consumer Protection Act.
The proposed legislation makes private student loan rehabilitation terms consistent with federal student loans and requires financial institutions to automatically seek correction of a borrower’s credit history once a successful rehab has been completed.
The amendment also contains the following changes.
Eliminates wage garnishment for borrowers making under 185 percent of the federal poverty line
and limits wage garnishment on private and federal student loans to 10 percent of discretionary
income for those who make more than 185 percent of the federal poverty line.
Ensures that private education loans are discharged when a borrower dies or becomes disabled.
Prohibits the acceleration of a student loan debt, also known as auto-defaults, for any other reason than if a borrower defaults due to missed payments.
Prohibits private student lenders from denying credit to individuals who qualify for protection under the Servicemember Civil Relief Act.
Restores private student loan dischargeability in bankruptcy.
Requires all student debt be forgiven in the event a service member dies in the line of duty, and federal student debt be forgiven if a service member dies of service-connected causes.