WASHINGTON D.C. — More than 850,000 private student loans worth an estimated eight billion dollars are currently in default, meaning, no one is making payments on those loans. U.S. Senator Gary Peters introduced a bill to Congress today that would give people with private loans a chance to improve their credit scores.
The bi–partisan bill is called the ‘FAIR Student Credit Act.’ It would allow people with private loans that are currently in default to negotiate a payment schedule with their bank or credit union to re–pay what they owe.
Once that payment schedule is agreed upon, borrowers would have to make nine consecutive payments to have the student loan default taken off their credit report.
“If you have a Federal Student Loan, this option is available to you,” said Senator Peters. “You can make payments and have your credit report rehabilitated. It does not exist if you have a private loan, a private student loan. When you have defaults on your credit report, it’s difficult to get another loan, it’s difficult to buy a car, or if you can it’s a lot higher interest rate. It’s difficult to rent an apartment, it can be more expensive to get insurance, and you have that record on your credit report for many, many years.”
The FAIR Student Credit Act is NOT designed to eliminate your student loan debt. Private loans make up about fifteen percent of the total loan debt