Level the playing field for public & private borrowers
Senate Committee passes Wieckowski private student loan bill
SB 16 lowers cap on the amount lenders can garnish from private borrowers
SACRAMENTO – The Senate Judiciary Committee today passed Senate Bill 16 by Sen. Bob Wieckowski (D-Fremont) to assist Californians struggling to repay their private student loan debts by lowering the cap on how much lenders can garnish from their paychecks. Wieckowski told the committee reducing the cap from 25 percent of a borrower’s wages to 15 percent, the same level as federal student loans, will encourage lenders to work more closely with students to create manageable repayment plans.
“Students, graduates and parental co-signers are being buried under a pile of debt that is a growing burden on the backs of families,” said Wieckowski, a member of the Senate Judiciary Committee. “We need more college graduates to meet the demands of our 21st century economy, but by allowing so much to be garnished from their pay checks when they default on a private loan, we are not giving enough assistance to borrowers who are juggling paying off their loans with everyday living expenses. There should be parity between federal and private student loans.”
SB 16 will benefit thousands of borrowers in California, which has an estimated $20 billion in outstanding private student loan debt. Unlike with federal student loans, private lenders are not required to offer different repayment options, such as deferments, income-based repayments and temporary postponements of payments. Student loans are also not dischargeable in bankruptcy.
“This bill would provide much needed protections to private student loan borrowers and work to create more uniformity for all loans students receive,” said David Lopez, president of the California State Student Association. “As the costs to attend college rise, and as students take on more debt to finance their education, CSSA supports efforts, like SB 16, aimed at leveling the playing field for all student borrowers.”
Other organizations supporting SB 16 include the California Faculty Association, Faculty Association of California Community Colleges, the Consumer Federation of California, the California Association of Nonprofits, the Western Center on Law and Poverty, and several others.
SB 16 next goes to the Senate Appropriations Committee.
Senator Wieckowski represents the 10th District, which includes southern Alameda County and northeast Santa Clara County.