As student loan legislation increasingly favors the consumer, incentives for lenders may be drying up.
A recent report by SmartMoney.com pointed to some of these proposals that could serve the current college crowd at the expense of future borrowers. The financial reform currently working its way through Congress is likely to include a regulatory committee to ensure that student loans are following certain standards.
“If a particular lender is generating a lot of complaints or if a particular type of complaint is appearing frequently across the industry, you’ll be more likely to see action when those complaints are concentrated within a single organization that has oversight,” Mark Kantrowitz, publisher of FinAid.org and FastWeb.com, said.
The Private Student Loan Bankruptcy Fairness Act of 2010 may reverse protections to pre-2005 levels by allowing students to file for bankruptcy protection on their private loans. Critics of the bill have said that lenders may respond by eliminating loan opportunities as well as hiking up interest rates on their current offerings.
Private student loans may be among the most difficult debts to eliminate because they cannot be forgiven through bankruptcy.
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