Student loan consolidation efforts have failed to gain traction in Congress, with Democrats largely blocking any legislation to help borrowers consolidate their student loans, despite strong public support for the idea.
The Congressional Budget Office estimated that nearly 20 million Americans would lose access to affordable and reliable federal student loans if the law is passed.
But the failure to pass legislation has not deterred student loan advocates.
“I think the focus is still on getting this passed,” said Michelle Schubert, the director of the Center for Responsible Lending at the University of Texas at Austin.
“But the fact that they’ve failed to move on it is something that worries me.”
Student loan borrowers, many of whom are college-bound and facing job losses, are worried that if the government doesn’t step in and provide relief to them, the program could collapse under the strain.
“The bottom line is that these students are not going to be able to get back into the job market because they’re not able to afford it,” said Josh Fink, a senior analyst with the Federal Reserve Bank of Dallas.
“This is going to make it hard for them to make their loans repayable and secure loans for the next four years.”
The American Federation of Teachers said it was not surprised that lawmakers were unwilling to pass student aid legislation, given the ongoing crisis.
“Our students and parents are struggling right now, and the president’s policies are hurting them,” AFT President Randi Weingarten said in a statement.
“We are committed to making sure that students and their families can have access to the education that they deserve.”
But some Republicans said the students have no other option.
Rep. John Fleming (R-La.) said that if Congress does not act, students will be forced to go without the support of their parents and other family members.
“Students who are struggling are going to have to borrow and borrow and, unfortunately, we’re not going go through the trouble of trying to get loans paid off,” he said.
Student loans can be forgiven if borrowers meet certain criteria.
For example, borrowers who meet certain minimum payment and repayment requirements can avoid the need for additional federal student aid.
But for those who don’t meet those criteria, the borrower may still need to pay off the loans through their own repayment plans, like the FHA, VA or the federal Direct Loan program.
Some states have made it easier for borrowers to defer repayment, by requiring borrowers to repay their loans over a certain period of time or make payments on the principal in advance.
The Obama administration has also proposed allowing borrowers to consolidate student loans into a new federal student loan that can be discharged during bankruptcy or if the borrower dies.
But the student loan crisis continues to worsen for borrowers.
In December, a report by the Congressional Budget Service said that federal student lending had increased by more than $20 billion in the fourth quarter of 2015, and that more than one-third of borrowers in the United States are at risk of having to default on their loans.
The report also noted that more borrowers are underperforming on their student loan payments.
A second report released by the Office of the Comptroller of the Currency on Thursday said that the federal government could face a $17.5 trillion deficit in the fiscal year that begins in October.
The CBO also estimated that the national debt would be $16.6 trillion by 2024, or more than five times what the federal budget deficit is today.
Read more at thestar.com.
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