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Happy to hear your comments on this.

Hi Folks,

Thanks to Nick, Petra, Shani, Richard, Janet, Gail, and Richard S. for stepping up with donations- the support is very helpful and needed.

So Here is my "very quick" take on Elizabeth Warren's refinancing bill (I will be writing a fuller article on this in the coming days)...

The Good:

For people with private loans at sky high interest rates, it is a good thing,
For people with federal loans, its a marginally helpful deal.

The BAD:
-Loans must be in good standing (ie not in default) in order to qualify

-There is a ..5% add-on to the principal from the get-go...not an insignificant frontload.


The Department of Ed gets to determine a debt/income ratio that must be met in order to qualify.


Private loans currently have many consumer protections (like statutes of limitations, Fair Debt Collection practices for example) that will go away when the loans are federalized. Also, collection powers for federal loans are FAR STRONGER than those for private loans. This is not trivial.

So...I would say generally that this bill could be helpful for a relatively small percentage of distressed borrowers, but clearly does not help those who are most severely impacted by their loans (since they are typically in default).

As many other well intentioned "fixes" that have been proposed in the past (like gainful employment, and other pieces of legislation), this is not much of a game-changer, and really only highlights the critical need for the return of standard bankruptcy, and other consumer protections to this debt!!

I'll be writing a fuller article on this in the coming days, but suffice it to say....we CANNOT let this piece of legislation dominate the discourse as other legislation has done in the past, folks...Whatever promise this bill may or may not hold for you, or your feelings about Elizabeth Warren, she is exactly right when she says that we really only have our voices and our vote...and I would say that only our voices matter right now-

Happy to hear your comments on this.

Alan Collinge


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