WASHINGTON – With the Senate preparing to reauthorize the Higher Education Act, Sen. Mark R. Warner (D-VA) today reintroduced three pieces of legislation aimed at providing urgent relief to borrowers amid the ongoing student debt crisis. The bills would give borrowers much-needed support by promoting financial literacy, thus empowering students to make more informed decisions and better manage their debt; making it easier for students to put their existing college course credits to use and receive the degree or credential they have already earned; and providing legal recourse for borrowers needing to sever a joint consolidation loan, including those being held responsible for an abusive or uncommunicative spouse’s loans.
Nationwide, Americans owe more than $1.5 trillion in student loan debt—surpassing credit cards and auto loans as the country’s leading source of non-housing debt. In the Commonwealth of Virginia, 62 percent of recent graduates have student loan debt, with an average debt of more than $33,000, according to the State Council of Higher Education for Virginia (SCHEV).
“Like many Americans, I had to rely on student loans in order to pay for my tuition and graduate from college. However, the rising cost of education has forced more and more people to rely on exorbitant student loans just to have a chance at competing in the workforce,” said Sen. Warner. “As we prepare to reauthorize the Higher Education Act, I am proud to reintroduce three pieces of legislation designed to assist Virginians saddled with unmanageable student loan debt. I urge my colleagues to quickly pass these measures, which empower young borrowers and eliminate pointless policies that make it more difficult for students to receive the degrees they have earned.”
The Empowering Students through Enhanced Financial Counseling Act will take the important step of tackling student loan debt on the front end by increasing financial literacy among prospective borrowers and empowering them to make better-informed decisions about their higher education financing. Current law only requires that institutions provide one-time entrance and exit counseling to student loan borrowers receiving federal student aid, excluding Parent PLUS loans and consolidation loans. This bill will promote financial literacy by requiring that federal student loan borrowers – both students and parents – receive annual counseling that reflects their individual borrowing situation; increasing awareness of accumulating financial obligations by requiring borrowers to consent each year before receiving federal student loans; requiring annual counseling for Pell Grant recipients; and directing the U.S. Secretary of Education to maintain and distribute an online counseling tool that institutions can use to provide the counseling required by the bill.
In addition to Sen. Warner, the Empowering Students through Enhanced Financial Counseling Act is being cosponsored by Sens. Tim Kaine (D-VA), Cory Gardner (R-CO), and Tim Scott (R-SC). This legislation has the support of the National Education Association, Bipartisan Policy Center, UNCF, TICAS, Chiefs for Change, and American Student Assistance.
Another piece of legislation, the Reverse Transfer Efficiency Act, will cut through bureaucratic red tape and make it easier for students to receive degrees they have already earned by facilitating the process of “reverse transferring” college credits – or transferring credits from a four-year institution to a two-year institution in which a student was previously enrolled to identify whether they earned enough credits along the way to receive a degree. The bill creates an additional exemption under the Family Educational Rights and Privacy Act (FERPA) to explicitly allow for the sharing of credit data between post-secondary institutions that a student previously attended, for the purpose of determining whether they earned an associate’s degree or certificate along the way. A cautious interpretation of FERPA currently requires students to give their institutions proactive permission to determine whether they have earned enough credits to be awarded a degree or certificate. As a consequence of this unnecessary bureaucratic step – which is proven to diminish credential attainment rates – four million Americans, including more than 123,000 Virginians, have left school without receiving the valuable credentials they paid for and worked hard to earn.
In addition to Sen. Warner, the Reverse Transfer Efficiency Act is being cosponsored by Sen. Johnny Isakson (R-GA). The legislation has the support of the Virginia Community College System, American Association of Collegiate Registrars and Admission Officers, American Association of Community Colleges, Hispanic Association of Colleges and Universities, Institute for Higher Education Policy, and Student Veterans of America, among others.
“As Virginia's Community Colleges continue working to prepare students with the skills they need to be successful in on-demand jobs and growth industries, credential attainment is a key indicator of their career readiness and our effectiveness in serving them,” said Glenn DuBois, chancellor of Virginia’s Community Colleges. “The bipartisan Reverse Transfer Efficiency Act will provide much needed clarity in facilitating communication between institutions and removing bureaucratic obstacles to credential attainment. I applaud Senators Warner and Isakson for working across the aisle to find common ground and introduce this sensible approach to advancing workforce readiness.”
Lastly, the Joint Consolidation Loan Separation Act will provide much-needed relief for borrowers who previously consolidated their student loan debt with a spouse’s. Congress eliminated the program in 2006 but failed to provide a way for borrowers to sever existing loans, even in the event of domestic violence, economic abuse, or unresponsiveness. As a result, too many borrowers nationwide remain liable for their abusive or uncommunicative spouse’s debt with no legal options for relief. The bill would establish a process at the U.S. Department of Education through which affected borrowers, including survivors of domestic violence or economic abuse, would be able to separate their student loan debt from that of their former spouse.
In addition to Sen. Warner, the Joint Consolidation Loan Separation Act is being cosponsored by Sens. Marco Rubio (R-FL) and John Cornyn (R-TX). It has the support of the Virginia Sexual and Domestic Violence Action Alliance, the National Network to End Domestic Violence, the National Consumer Law Center (on behalf of its low-income clients), and the North Carolina Coalition Against Domestic Violence.
“The Action Alliance is pleased to support these efforts to provide victims of domestic and economic abuse with student loan relief,” said Jonathan Yglesias, Policy Director at the Virginia Sexual and Domestic Violence Action Alliance. “This bill will make a difference for the people who need it, and I hope Congress will move swiftly to enact it.”
Click here for more information on the Empowering Students through Enhanced Financial Counseling Act, the Reverse Transfer Efficiency Act, and the Joint Consolidation Loan Separation Act.