Sen. Elizabeth Warren (D-Mass.) has called for major reforms to student loans, including a bankruptcy option for private student loans. Speaking at the Education Writers Association’s Conference on Higher Education held at Northeastern University, Warren outlined several reforms to address the rising costs of attending college.
Warren did not offer a specific proposal to address the issue, but she said that Congress could do more to help graduates with student loan debt. She detailed problems faced by graduates with student loan debt and advocated for better financial support for public colleges, writes Tyler Kingkade of Huffington Post.
At the conference, Warren said the reforms enacted in the past three decades have made discharging education debt practically impossible, except in extreme circumstances, and these reforms should be reversed.
“We stepped a piece at a time into making student loans impossible to deal with when a person hits a financial crisis, there are a lot of steps we could take back out of that,” Warren said. “I’d like us to go a long way toward letting people deal with student loans the same way they deal with home mortgages and medical debts.”
Warren is already co-sponsoring a bill that would roll back a 2005 reform preventing private student loans from being discharged in bankruptcy. Sen. Dick Durbin (D-Ill.) has pursued the bill in the past two sessions of Congress.
About 35 consumer and student advocacy organizations have endorsed the legislation, including the Institute for College Access & Success. In 2012, the Consumer Financial Protection Bureau issued a report suggesting Congress consider rolling back bankruptcy restrictions on private student loans.
“Americans with private education loans who fall on hard times deserve bankruptcy relief and a fresh start just like everyone else,” said Pauline Abernathy, vice president of The Institute for College Access and Success, which runs the Project on Student Debt. Many of Warren’s proposals mirrored a white paper the group released earlier this year.
According to Warren, student loans are the worst kind of consumer debt families face today because they start early and “they are inexorable — you can’t get rid of them.”
“Young people get into trouble on these debts and you know what happens? It just means the amount they owe keeps going up and up and up,” Warren said. “It’s crushing these kids.”
Among Warren’s other proposals: providing federal financial assistance to states that fund public colleges, eliminating government profits from student loans, and punishing colleges with graduates who aren’t able to manage their debt, suggesting schools that have a high number of graduates defaulting on their loans should pay back money to the federal government. That money could in turn be used to reward the schools that keep costs low, Warren said.
Warren also said that students should have their aid packages calculated before they even apply for college, and the federal government should proactively guide graduates with debt towards more beneficial repayment plans.