Stevens, Mucarsel-Powell Introduce Legislation to Help Student Loan Borrowers Restore Credit After Default

September 19, 2019
Press Release

WASHINGTON, D.C. – This week, Representatives Haley Stevens (MI-11) and Debbie Mucarsel-Powell (FL-26) introduced H.R. 4395, the Clean Slate through Consolidation Act and H.R. 4396, the Clean Slate through Repayment Act, two bills to remove default records from the credit history of federal student loan borrowers who have consolidated their defaulted loan or repaid the loan in full.  

Federal student loan borrowers typically pursue full repayment, loan rehabilitation, or loan consolidation to get out of default. While each of these three options remove the default status from loans, only borrowers who complete the loan rehabilitation process will have the record of default removed from their credit history. A record of default on a borrower’s credit history can have a severe and long-lasting impact on their financial situation. Defaults are reported to credit bureaus, damaging the borrowers credit rating and affecting their ability to buy a car or house or get a credit card.  

“The Clean Slate through Consolidation Act gives federal student loan borrowers a fair chance to reestablish their credit after completing the loan consolidation process to get out of default. This bill will help student loan borrowers get back on their feet and start contributing to our economy. Borrowers who are making a good faith effort to pay off their loans should not have to spend the rest of their lives paying for one financial setback,” said Congresswoman Stevens.

“If we’re serious about helping Americans obtain higher education and achieve financial independence, we should be helping people who are making efforts to repay their loans repair their credit. Student loan defaults have a disproportionate effect on people of color who are simply trying to unlock the American Dream – they should not be punished for that. These bills are simple steps to clear financial stains from a person’s record after they have consolidated or repaid their loan in full,” said Congresswoman Mucarsel-Powell.

“These bills take important steps toward making default less punitive for millions of student loan borrowers, ensuring that the devastating consequences of default don’t plague borrowers even after they’ve taken steps to repay their debt,” said Colleen Campbell, Director of Postsecondary Education, Center for American Progress.

“These bills take important steps to address the overly punitive consequences of student loan default and ensure that student loan borrowers who resolve their default can move forward with their financial lives,” said Michele Streeter, External Affairs & Policy Analyst, The Institute for College Access & Success.