EFC: Student Act Does Little for School Debt

Yesterday the Education Finance Council (EFC), which represents U.S. nonprofit and state agency student finance organizations, opposed the Fairness for Struggling Students Act of 2011.

In late May, Senators Dick Durbin (D-IL), Sheldon Whitehouse (D-RI) and Al Franken (D-MN) joined U.S. Representatives Steve Cohen (D-TN), Danny Davis (D-IL), George Miller (D-CA) and John Conyers (D-MI) in introducing this legislation in both the Senate and the House with the goal to treat private student loans in bankruptcy the same as other types of private debt.

In EFC's statement, it opposed the act saying that the challenge of excessive student debt must be answered by preventing over-borrowing. It added that the bill ignores most of the U.S. student debt by focusing on private student loans.

"EFC does not support the Fairness for Struggling Students Act, which does little to fix the problems with increasing student debt," the EFC stated. "While we acknowledge these are challenging fiscal times for individuals, the myopic focus on changing one small part of the bankruptcy code to perhaps quell the short-term challenges of students with large loan balances and few job prospects will not prevent the excessive student debt problems from reoccuring."

It cited the Department of Education’s full-year 2013 budget that estimated that it will originate $121 billion in loans, whereas the total amount of privately issued student loans is projected to be $7 billion for the same period.

The EFC prepared the statement in time for today's Senate Judiciary Committee Subcommittee on Administrative Oversight and the Courts meeting on the student debt crisis, which will focus on how to provide fairness to students who are struggling.

For the EFC's full statement, please click here.