Currently, many student borrowers are required to have a co-signer in order to qualify for loans through private lending institutions. If the co-signer, usually a parent or grandparent, suddenly dies or files for bankruptcy, the lender declares an automatic default on the loan - even if the loan payments have been made on time.
The Protecting Students from Automatic Default Act will require private lending institutions to allow a student 90 days to find a new co-signer. It will also require lenders to notify students when a loan is placed in automatic default. Notification is required for changes in the terms of the loan or acceleration of the repayment terms due to the death or bankruptcy of a co-signer.
"The practice of automatically defaulting on student loans without notice to the student or an opportunity for the student to find a new co-signer is deplorable," said Congressman Bishop. "Access to higher education has been shown to be the lynchpin of success in our society. We need to make it easier for students to pay for college or technical school, not pull the rug out from under them when their circumstances change through no fault of their own."
"A college education remains the gateway to the middleclass and that shouldn't be in jeopardy should a loved one pass-away," said Congressman
"The Protecting Students From Automatic Default Act of 2014 would help protect students who take out nongovernmental loans to finance their education," said
"Borrowers get an education to achieve a better life for their families," said
"They deserve support during times of grief, not an unexpected bill for the remainder of their student loans. We commend Representative Bishop for introducing the Protecting Students From Automatic Defaults Act to hold student loan lenders accountable and end this unconscionable practice."
"Private student loans need more safeguards for students and the Protecting Students from Automatic Default Act of 2014 puts into place a fair and common sense protection by ensuring borrowers do not automatically end up in default because of the death of a co-signer," said
According to the
Congressman Bishop introduced H.R. 4511 on
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