Larsen Calls for Hearing on Bereaved Borrowers’ Bill of Rights

May 29, 2014 Issues: Education

WASHINGTON—Rep. Rick Larsen, WA-02, today sent a letter to the chairman and ranking member of the House Committee on Financial Services requesting a hearing on the Bereaved Borrowers’ Bill of Rights, a bill Larsen introduced earlier this month.

The bill is designed to protect private student loan borrowers from “auto-defaults” when a loan cosigner, often a parent or grandparent, dies or files for bankruptcy.

Full text of the letter follows.

 

May 29, 2014

The Honorable Jeb Hensarling                                            The Honorable Maxine Waters
Chairman                                                                            Ranking Member
Committee on Financial Services                                         Committee on Financial Services
2129 Rayburn HOB                                                            B301C Rayburn HOB
Washington, DC 20515                                                       Washington, DC 20515

Dear Chairman Hensarling and Ranking Member Waters:

As you consider the schedule for the Financial Services Committee, we ask that you add a hearing and markup of H.R. 4643, the Bereaved Borrowers’ Bill of Rights Act of 2014, and H.R. 4511, the Protecting Students from Automatic Default Act of 2014.  

We recently introduced these bills to protect private student loan borrowers from unfair lending practices identified by the Consumer Financial Protection Bureau. The Bureau’s newest report on student loan complaints show that some students are sent into “auto-default” on their loans following the death or bankruptcy of a cosigner, even when the students are making loan payments on time. Many loans also advertise cosigner release, where the borrower can apply to release their cosigner after a period of timely payments. However, many lenders do not make this process accessible on their website, clear to the borrower, or available to all borrowers.

H.R. 4643 would create a robust set of protections for students facing these difficult circumstances, allowing them time to replace or release their cosigner, requiring improvements to the cosigner release process, and prohibiting defaults in these circumstances from appearing on credit reports and ruining the credit of hardworking students. H.R. 4511 is narrowly targeted to give borrowers 90 days from learning of the death or bankruptcy of a cosigner to identify a new cosigner for the loan.

These bills have received national news coverage and support from local universities, national education organizations, and other Members of Congress. We believe these important student protection initiatives are well-positioned to receive bipartisan support and we ask for prompt consideration by the Committee. 

We appreciate your consideration and look forward to working with you. 

Sincerely,

Rick Larsen                                                                           Tim Bishop
Member of Congress                                                             Member of Congress
Washington, 2nd District                                                        New York, 1st District

 

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