According to Chopra’s written testimony, Chopra will state that the “private student loans often lack repayment flexibility,” unlike federal student loan programs. Private student loan programs usually do not have a income-based repayment program as a feature.
In addition, Chopra states:
Private student loan borrowers also experience significant challenges when attempting to restructure their loan obligations, due to an unusual status in the federal bankruptcy code and a nearly nonexistent refinance market.According to Chopra’s testimony, many private student loan borrowers remain stuck in high interest rates and high monthly payments, because they cannot easily refinance their loans.
Chopra will ask Congress “to consider requiring school certification of loans, modifying the definition of a private student loan, and further investigating whether the 2005 change to the bankruptcy code met its intended goals.”
Chopra acknowledges that although student debt is not a systemic risk to the banking system, it is a significant drag on the economy.
Read Chopra’s full testimony.
Read more about the Senate hearing.
For a compendium of CFPB resources and analysis, see ABA's CFPBureau Watch