President Obama signs new student loan legislation; plus, more information on student loan debt

by Brian Wolfman

We've been covering the congressional debate over interest rates on students loans. (Go, for instance, here and here.) On Friday, President Obama signed the Bipartisan Student Loan Certainty Act of 2013. It will bring most undergraduate loan rates below 4%. (Those rates were at 3.4% before July 1, when they doubled because Congress could not then agree on new legislation.) The new law allows loan rates to float, linked to (but above) treasury bill rates and subject to caps on the high end. Chris Morran at the Consumerist fully explains here.

Meanwhile, Rohit Chopra at the Consumer Financial Protection Bureau has written this piece breaking down the status of the country's more than $1 trillion dollars in student loan debt. Only about half of all student loans are currently being repaid. About 6.5 million student loan debtors are in default, which Chopra calls "noteworthy." He goes on: "Defaulting on a federal student loan has serious consequences. Unlike
other consumer credit, borrowers in default on a federal student loan
might see their tax refund taken and their wages garnished without a
court order." Chopra might have also explained that, unlike almost all other consumer debt, student loan debt may not be discharged in bankruptcy (unless the debtor's circumstances meet a very narrow statutory exception).

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