Federal legislation hopes to add consumer protections to student loans

An acceptance letter to UNC-Chapel Hill brings an offer to attend a top public university — but for some students, it also brings an enormous bill.

Of the undergraduate students who need aid, 24 percent receive student loans.

Those students currently do not have the same consumer protections as other loan borrowers, but a U.S. House of Representatives bill introduced last month aims to ramp up protections for student borrowers by allowing them to file for bankruptcy and trimming the statute of limitations.

The Student Loan Borrowers Bill of Rights, introduced by Rep. Frederica Wilson, D-Fla., would add consumer protections in hopes of unburdening borrowers of the pressures associated with student debt.

The average UNC senior who borrowed student loans will graduate with $16,150 in debt — but UNC students are among the best in the nation in repaying loans, said Shirley Ort, associate provost and director of scholarships and student aid.

“At Carolina, the bill does not seem very relevant because about 97 percent of our students pay their student loans back and on time,” Ort said.

But many students nationwide are feeling the shackles of student loan debt.

Robert Applebaum, co-founder and executive director of StudentDebtCrisis.org, said lenders are currently in control because students cannot file for bankruptcy if they default on their loans.

“This bill seeks to right these wrongs,” he said.

Applebaum and Alan Collinge, founder of StudentLoanJustice.org, said they agree that the student loan system should be overhauled.

“If this (bill) causes lenders to alter their behaviors in some way, I think that could only benefit students,” Applebaum said.

Collinge said if students are able to declare bankruptcy, the lenders would be more cautious about who they lend to — and schools would be forced to lower their price tags.

“You wouldn’t just give people blank checks all day if it were your money,” Collinge said.

But Ort said he is more skeptical and that the bill does not balance lender and student interests.

She said while student borrowers should have loan funds readily accessible, lenders should have confidence that they will be repaid.

“There should be protections for students who experience hardships, but the provisions of this bill appear to me to go way beyond hardships,” she said.

Applebaum said Americans’ $1.2 trillion student loan debt weighs down the economy.

“That existing debt is acting like a boot on the neck of 40 million Americans.”

state@dailytarheel.com