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Student Loan Borrower Safety Net Act of 2021
12/30/2022, 8:03 AM
Summary of Bill HR 5890
Key provisions of the bill include:
1. Creating a borrower defense fund to provide financial assistance to borrowers who have been defrauded by their schools or have experienced other violations of consumer protection laws. 2. Establishing a student loan ombudsman within the Consumer Financial Protection Bureau to assist borrowers in resolving disputes with their loan servicers and provide information on repayment options. 3. Requiring loan servicers to provide clear and accurate information to borrowers about their repayment options, including income-driven repayment plans and loan forgiveness programs. 4. Prohibiting loan servicers from engaging in deceptive or abusive practices, such as misrepresenting the terms of a loan or charging excessive fees. 5. Allowing borrowers to refinance their federal student loans at lower interest rates, potentially saving them money over the life of the loan. Overall, the Student Loan Borrower Safety Net Act of 2021 aims to provide much-needed support and protections for individuals struggling with student loan debt. It seeks to ensure that borrowers are treated fairly by loan servicers and have access to resources to help them manage their debt effectively.
Congressional Summary of HR 5890
Student Loan Borrower Safety Net Act of 2021
This bill requires the Department of Education (ED) to carry out a program to notify borrowers that normal payment obligations on their federal student loans will resume.
Not later than 60 days before payment obligations are no longer suspended (as determined by ED), ED must provide at least six notices to borrowers indicating that their payment obligations will resume. These notices must also indicate the options for (1) enrolling in income-driven repayment plans, and (2) rehabilitating or consolidating loans.
ED must provide priority notification to certain borrowers, including those who missed a payment in the first three months of entering repayment on a loan.
The bill allows borrowers to (1) submit an application or reapplication for an income-contingent or income-based repayment plan and self-certify their income and family size, (2) change their repayment plan without a fee, and (3) apply for an economic hardship deferment.
If a borrower misses a payment or payments on a loan during the 60 days after the payment suspension ends, then the loan must be held in administrative forbearance for 90 days.
