New Student Loan Rules Add Protections For Borrowers
Career College Central summary:
The Department of Education has created new rules that will bolster borrower protections for federal education loans.
The new regulations will make it easier for distressed borrowers to get out of default and repay their loans, said Pauline Abernathy, vice president of the nonprofit Institute for College Access and Success, which supported the changes.
More than 600,000 federal student loan borrowers who began repaying their debts in 2010 defaulted on their loans by 2012, according to federal data. Almost half — 46 percent — attended for-profit colleges, which also had higher average default rates than other schools. For-profit schools had an average default rate of almost 22 percent, compared with about 15 percent for borrowers across all colleges.
Under federal law, those who are in default on federal student loans may “rehabilitate” them by making nine on-time payments in amounts that are “reasonable and affordable.” Rehabilitation lets the borrower get out of default and become eligible for further federal student aid.
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THE NEW YORK TIMES