December 18, 2014


WASHINGTON – Senate Banking Committee Chairman Tim Johnson (D-SD) sent letters on Wednesday to U.S. Department of Education Secretary Arne Duncan, U.S. Department of the Treasury Secretary Jack Lew, and Consumer Financial Protection Bureau (CFPB) Director Richard Cordray calling for coordinated action between the agencies to address issues in the student loan market, including student loan servicing and debt collection.
“While college still represents one of the surest paths to the middle class, rising student loan debt makes it increasingly difficult for graduates to buy a house, start a business, or save for retirement,” Johnson said. “In my home state of South Dakota, one of the states with the highest proportion of students graduating with debt, nearly three-fourths of graduates finish school with over $25,000 in debt.”
In his letters, Chairman Johnson urges the agencies to undertake a “serious study of the market for refinancing student loans and develop a plan to enable borrowers to take advantage of the current low interest rate environment.” Johnson also calls for additional reforms to the student loan market, including “requiring more transparent disclosures to students before taking on student loan debt, mandatory certification for private student loans, release of co-signers upon the death or disability of a borrower, and improved credit reporting for education loans.”
“Clearly more needs to be done to create enforceable consequences for servicers that do not comply with their responsibilities,” Johnson continued. “Servicers are expected to treat borrowers fairly and transparently, which includes ensuring loan information is correct, fees are accurately assessed, and borrowers are given all relevant information about their loans.”
As Chairman of the Senate Banking Committee, which has jurisdiction over financial institutions in the student loan market, Johnson has held several hearings on ways to address existing and future student financial products.
Click here to view a copy of the letter to the Department of Education, here to view a copy of the letter to the Treasury Department, and here to view a copy of the letter to the CFPB.