Level the playing field for public & private borrowers
Senate passes Wieckowski bill to assist Californians with private student loan debt
SB 16 cuts the amount lenders can garnish from private borrowers
Sacramento – State Senator Bob Wieckowski’s (D-Fremont) bill to lower the cap on how much lenders can garnish from Californians who have defaulted on their private student loans passed the state Senate today with bipartisan support. SB 16 helps to level the playing field between public and private loans by lowering the private loan garnishment cap to 15 percent of wages, the same amount as federal student loans.
“Too many Californians of all ages and backgrounds are burdened by the amount of debt they have accumulated just to get a college degree or help their son or daughter graduate,” said Wieckowski, a member of the Senate Judiciary Committee. “While federal student loans offer repayment options that make them more consumer friendly, SB 16 will add more parity to the system by reducing the private loan garnishment cap from 25 percent to 15 percent. This allows borrowers to have more flexibility to pay for other everyday living expenses, and hopefully encourages private lenders to offer more manageable payment options to their borrowers.”
Student loans are not dischargeable in bankruptcy and the national student loan debt is $1.3 trillion, more than auto or credit card debt. California borrowers have about $20 billion in outstanding private student loan debt.
“Despite the fact President Trump’s companies have filed bankruptcy multiple times to discharge debts, I do not see signs that student loan borrowers will receive any help from his administration,” Wieckowski said. “SB 16 provides real relief for Californians struggling with private student loan debt.”
Federal loans offer a number of options to borrowers who find themselves unable to meet their loan obligations, such as deferments, income-based repayments, and, in some cases, cancellations or discharges. Private lenders are not required to offer these options.
“These mortgage-sized loans cause many graduates to postpone buying a home, getting married, starting a family, and saving for retirement,” said Jessica Bartholow, a policy advocate with the Western Center on Law & Poverty. “And while average student debt hit a record above $30,000 this year, income growth has not kept pace with the rise in student loans or housing costs.”
SB 16 now heads to the state Assembly. In addition to the Western Center, the bill is supported by the California State Student Association, the California Faculty Association, the Faculty Association of California Community Colleges, the Consumer Federation of California and several other organizations across the state.
Senator Wieckowski represents the 10th District, which includes southern Alameda County and northeast Santa Clara County.