Detroit News: Private lenders could restore student credit under bill

It should be easier for borrowers to repair their credit after defaulting on private student loans, Democratic U.S. Sen. Gary Peters said Monday at Michigan State University.

Peters, with Sen. Shelley Moore Capito, R-West Virginia, is introducing a bill that would allow lenders to restore borrowers’ good credit following a consecutive series of on-time payments over nine months.

Under current law, federal student loans may be rehabilitated once, and borrowers may repair their credit after the default. Private lenders do not have the same ability.

“It is simply unfair to deny some graduates the ability to get their finances back on track after a default simply because their loans are private instead of public,” said Peters of Bloomfield Township.

He noted that most borrowers who struggle are recent graduates who either don’t get a job soon after graduation or who don’t make enough to make loan payments on top of their other bills.

“It’s really meant to be a second chance, but it also addresses the reality of a student loan — which is that most people who default on their student loans do it early in their career before their career’s even started,” said Peters, noting the bill has the support of Navient, the nation’s largest servicer of student loans.