The Student Loan System is a Mess

What's Hot


The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

How a Mexican Tariff Will Boost the Cost of 6 Common PurchasesFamily

This Free Software Brings Old Laptops Back to LifeMore

How to Protect Yourself From the ‘Can You Hear Me?’ Phone ScamFamily

Report: Walmart to Begin Selling CarsCars

Is Your TV Tracking You? Here’s How to Tell — and Prevent ItAround The House

Trump Scraps FHA Rate Cut — What Does It Mean for You?Borrow

Where to Sell Your Stuff for Top DollarAround The House

11 Staging Tips to Help You Get Top Dollar When Selling Your HomeAround The House

8 Tuition-Free U.S. CollegesCollege

10 Overlooked Expenses That Ruin Your BudgetFamily

4 Car Insurers That Might Raise Rates Even When the Accident Wasn’t Your FaultCars

How to Invest If Trump Kills the ‘Fiduciary Rule’Grow

20 Simple Hacks to Make Your Stuff Last LongerAround The House

12 Surprising Ways to Wreck Your Credit ScoreBorrow

If you have student debt, or know someone who does, you probably know the system isn't ideal. Consumers Union has some ideas about how to fix it.

It’s time for Congress to renew the Higher Education Act, a law that governs how federal student aid is given out.

“It touches on everything from loan limits to accreditation, determining who gets money, how much, and when,” The Chronicle of Higher Education says.

Consumers Union is proposing Congress create fixes to help people with student loans. They begin by highlighting these facts:

  • Student loan debt tops $1 trillion, more than Americans owe on their credit cards.
  • Tuition at public colleges has increased more than 500 percent since 1985.
  • Average family incomes are lower than they were a decade ago.
  • About two-thirds of college students graduate with student loan debt, averaging $26,600.

“The federal government is the largest student lender, with roughly 85 percent of the market,” Consumers Union says. So, it reasons, the solution should start with the federal government.

Student loan offers are confusing and families often don’t understand the different types, eligibility requirements, and associated costs. Payments often aren’t processed fairly, as the Consumer Financial Protection Bureau recently noted. Loan servicers sometimes do a poor job of communicating information, maintaining and providing records, or working with consumers to resolve issues.

Consumers Union covers all of that and other problems in detail in its recent Degrees of Debt report. Here are the fixes it wants Congress to legislate:

  • Transparent lending options that should be easily comparable.
  • Schools should help students find the most affordable ways to pay for college, through pre-loan counseling and by working with private lenders.
  • Borrowers should be given reasonable, flexible repayment options, including income-based repayment plans, deferments and forbearances, and acceptance of partial payments.
  • Fees should be reasonable and payments should be processed fairly, not spread out to cover multiple loans in a way that triggers extra fees and damage to credit.
  • Require student loan servicers to establish clear procedures and a single point of contact for questions and complaints so they get resolved quickly.
  • Borrowers should have the opportunity to discharge or cancel loans in certain circumstances, including long-term economic hardship.

Some of these solutions are already at least partially in place for federal student loans, but not private ones. Consumers Union wants the protections to become stronger across the board.

Do you support or disagree with the fixes Consumers Union wants? Comment below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: 21 Restaurants Offering Free Food Right Now

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,824 more deals!