The 2016 Democratic Party’s draft platform has some major wins for those struggling with student loan debt. Whether you end up supporting the Democrats or Republicans in the 2016 presidential election, it’s useful to know where each side stands on the issues of concern to you.
Here’s what the Democrats have to say:
Democrats will allow those who currently have student debt to refinance their loans at the lowest rates possible. We will simplify and expand access to income-based repayment so that no student loan borrowers ever have to pay more than they can afford. And we will significantly cut interest rates for future undergraduates, thereby preventing the federal government from making billions of dollars in profit from student loans. Democrats will also fight for a Student Borrower Bill of Rights to ensure borrowers get adequate information about options to avoid or get out of delinquency or default. We will hold lenders and loan servicers to high standards to help borrowers in default rehabilitate and repay their debts. Finally, Democrats will restore the prior standard in bankruptcy law to allow borrowers with student loans discharge their debts in bankruptcy as a measure of last resort.
In a nutshell, Democrats would allow student loan borrowers to:
- refinance student loans are lower rates than current exist;
- cut interest rates on new student loans;
- expand income-dependent repayment programs;
- improve student loan education; and
- bring back the ability to discharge student loans in bankruptcy.
But here’s what I want to know.
Do the Democrats want to allow borrowers to refinance only federal student loans at lower rates, or does the platform include the ability to refinance private student loans under a federal program of some sort?
Regardless of the type of loan permitted to be refinanced, how low of a rate are we talking about? Are the Democrats talking about bringing down the interest rate to 0.9%, which is the rate currently paid in the United Kingdom on student loan debt being paid through an income-dependent repayment plan?
How much expansion of income-dependent repayment programs is expected? Will those who currently have Parent PLUS Loans be allowed to take advantage of income-based repayment and Revised Pay As You Earn, two options currently not available on these loans? Will private student loan borrowers be permitted to opt into income-dependent repayment plans currently applicable only to federal student loan borrowers?
When the Democrats say they want to restore the prior standard in bankruptcy law to allow borrowers with student loans discharge their debts in bankruptcy, does this mean the ability to wipe out private student loans? Or are they proposing the ability to wipe out federal student loans that have been in repayment for a period of time, as was the case prior to 1998?
The Democratic Party Platform looks good for student loan borrowers – the question is whether it’s good enough, or just a first step towards getting people the help they really need.
You can take a look at the draft version of the Democratic Party Platform as of July 1, 2016 by clicking here.