UNCF Applauds Passage of the Student Borrower Credit Improvement Act
Act would provide greater flexibility for private student loan borrowers
On Wednesday, the U.S. House of Representatives passed H.R. 3621, the Student Borrower Credit Improvement Act. This bill was led by Representative Ayanna Pressley and Representative Alexandria Ocasio-Cortez, both who serve on the House Committee on Financial Services. The Act, passed on the House floor by a vote of 221 to 189, seeks to safeguard a borrower’s credit by not allowing any consumer reporting agency to furnish a consumer report containing any adverse item of information relating to a delinquent or defaulted private education loan of a borrower, as long as certain requirements are met.
“The passage of H.R. 3621 is a good step in the right direction for creating flexibility for our private student loan borrowers,” said Dr. Michael L. Lomax, president and CEO of UNCF. “Black student loan borrowers take out more loans, and at higher rates, due to the inequities found in the black community. For instance, the black community is continually faced with being paid lower salaries in the job market and being employed at lower rates, even with a college degree, leading to higher defaults on their loans compared to their white peers. This reality impacts household incomes of black families, resulting in the increased need of their children to rely on student financial aid. In addition to that, because a larger percentage of students at HBCUs are low-income and first-generation, they take on more debt than their peers at other institutions, to include private student loan debt. In fact, a report released by UNCF found that twelve percent of bachelor’s degree recipients at HBCUs borrowed a combination of federal, state and private loans, compared to only eight percent of non-HBCU graduates.”
“Student loan borrowers should not be penalized for financing their education, especially if they are low-income and have no outside support. Federal student loans provide greater flexibility for borrowers when it comes to repayment and the private student loan industry needs to step it up,” said Lomax.
H.R. 3621 was introduced in July 2019 and will allow borrowers who are delinquent or have defaulted on a private loan to rehabilitate their credit by making nine on-time monthly payments within a period of 10 consecutive months. Grace periods are given to borrowers who encounter certain unforeseen circumstances. The text of this piece of legislation can be found here.
UNCF (United Negro College Fund) is the nation’s largest and most effective minority education organization. To serve youth, the community and the nation, UNCF supports students’ education and development through scholarships and other programs, strengthens its 37 member colleges and universities and advocates for the importance of minority education and college readiness. UNCF institutions and other historically black colleges and universities are highly effective, awarding nearly 20 percent of African American baccalaureate degrees. Today, UNCF supports more than 60,000 students at more than 1,100 colleges and universities across the country. Its logo features UNCF torch of leadership in education and its widely recognized motto, “A mind is a terrible thing to waste.”® Learn more at UNCF.org, or for continuous updates and news, follow UNCF on Twitter at @UNCF.