Banking Bill Gives Student Loan Borrowers a Little More Flexibility
The Banking Act, just signed into law by President Donald Trump, includes rules that could appease private student loan borrowers.
Private student loans have less protection and less flexibility than government loans, but according to CNBC, the law does two things to help borrowers: It changes the way defaults are reflected on a borrower’s credit report, and how private lenders view death or bankruptcy. co-signers.
The first change is about default and your credit report: if a borrower defaults but then makes consistent payments through a loan rehabilitation program , he can ask to have the black mark removed from his credit report once for each loan. (Make sure your lender offers a rehabilitation program before applying for a loan.)
The second change means that private lenders will no longer be able to “default or expedite a private education loan when the co-author of the loan dies or files for bankruptcy.” In addition, the parties to the agreement will be released from the remaining debt in the event of the death of the student borrower.
These two rules will apply to private loans received 180 days or more after the passage of the bill.
And, as I wrote here , the bill will also make the credit freeze free and extend the credit fraud warning from 90 days to one year , which means two more small benefits for consumers.