Durbin, Warren, Reed: Bill Would Put Student Loan Borrower Bill Of Rights Into Law

Legislation to reform disclosure and servicing standards for student loans follows President Obama’s announcement of additional relief for borrowers

[WASHINGTON, DC] – Following a decision by President Obama to provide additional protections to student loan borrowers, U.S. Senators Dick Durbin (D-IL), Elizabeth Warren (D-MA) and Jack Reed (D-RI) today introduced legislation to ensure struggling student loan borrowers are treated fairly and understand the full range of repayment options and resources available to them.  Cosponsors of today’s legislation include:

“I commend the President’s announcement of additional relief for student borrowers earlier this month, but that doesn’t excuse Congress from addressing our national student debt crisis.  More must be done to help the nearly 40 million Americans holding some $1.2 trillion in student loan debt,” said Durbin.  “The Student Loan Borrower Bill of Rights will ensure that all borrowers have basic rights and protections as they repay their student loans and more repayment options if they find that, despite their best efforts, they are unable to make their monthly payments in full.”


“Student loan borrowers should receive clear and accurate information about their loans and repayment options,” said Senator Warren. “Since last year, nearly a million more borrowers have fallen behind on their student loan payments and total student loan debt in this country continues to grow.  I’m joining Senators Durbin and Reed in introducing the Student Loan Borrower Bill of Rights to help strengthen protections for student borrowers and to improve accountability for servicers.”


“Congress must work together to address the problem of college affordability and rising student loan debt in a comprehensive way.  It can also take smart steps like passing the Student Loan Borrower Bill of Rights to help students and families better manage their student loan debt and ensure that they are treated fairly.  This legislation will strengthen consumer protections for students and streamline the process by which lenders and borrowers resolve complaints,” said Senator Reed.


Though many students hold federal student loans with strong consumer protections, many take out private loans that carry no limits on interest rates and offer few, if any, alternative repayment plans. In some cases, even federal student loan borrowers are unaware of options like income-based repayment and public service loan forgiveness. Payments are sometimes misallocated to loans with lower interest rates, preventing borrowers from paying loans off quickly, and borrowers report significant challenges in resolving errors on their accounts in a timely manner.


While placing a special focus on servicemember and veteran borrowers by requiring loan servicers to provide each borrower with a liaison specifically trained in the benefits available to military borrowers, the Student Loan Borrower’s Bill of Rights provides six basic rights for all federal and private student loan borrowers:

  • The right to have options such as alternative payment plans to avoid default.


  • The right to be informed about key terms and conditions of the loan and any repayment options to ensure changing plans won’t cost more.


  • The right to know your loan’s servicer and who to reach out to when there is a problem.


  • The right to consistency when it comes to how monthly payments are applied. Lenders and servicers should also honor promotions and promises that are advertised or offered. 


  • The right to fairness, like grace periods when loans are transferred or debt cancellation when the borrower dies or becomes disabled.


  • The right to accountability, including timely resolution of errors and certification of private loans.


Durbin has long advocated for increased protections for student borrowers and he has worked to build broad support in the Senate for legislative action to reduce new student loan debt and make it easier for millions of working families to manage the student loan debt they already have.


Earlier this month, Durbin introduced his Fairness for Struggling Students Act which aims to restore fairness in student lending by treating privately issued student loans in bankruptcy the same as other types of private debt.  Durbin’s Fairness for Struggling Students Act would restore the bankruptcy law, as it pertains to private student loans, to the language that was in place before 2005 so that privately issued student loans will once again be dischargeable in bankruptcy like nearly all other forms of private debt.  Since 1978, government issued or guaranteed student loans have been treated as non-dischargeable during bankruptcy in order to safeguard federal investments in higher education.  In 2005, the law was unjustifiably changed to give private student loans the same privileged bankruptcy treatment as government loans, even though private student loans have vastly different terms and fewer consumer protections. 


In addition, nine months ago, Durbin led a letter urging the Department of Education to establish clear standards for when Department contractors should contest claims of “undue hardship” by student borrowers.  In the letter – signed by Reed, Warren and U.S. Representatives John Conyers (D-MI), Elijah Cummings (D-MD), Steve Cohen (D-TN), and Hank Johnson (D-GA) – the members of Congress argued that such guidance would bring consistency to the manner in which the Department of Education’s contractors handle undue hardship claims and further enable the Department of Education to focus student loan collection efforts on cases where there is a more realistic opportunity for loan recovery instead of clear cases where borrowers are simply unable to repay their loans because of disability or other circumstances.