Student loan debt in the United States tops $1.3 trillion, considerably more than credit card debt and auto loan debt. More than 40 million Americans are saddled with this burden. They include recent graduates, mid-career professionals and seniors who co-signed onto loans. But unlike federal loans, many private loans do not provide borrowers with helpful repayment options. In fact, borrowers who default on their private loans can see 25 percent of their paychecks garnished by lenders.
This is why I am authoring Senate Bill 16, which is one step away from going to Governor Brown for his signature. SB 16 provides more parity between federal and private loans by lowering the cap private lenders can garnish from borrowers’ paychecks to 15 percent, the same as on federal loans.
While federal loan borrowers are afforded lower interest rates, fixed interest rates, and more repayment flexibility, private student loan borrowers have variable interest rates and consistently report their inability to negotiate with their creditors. Experts say students and families should exhaust federal aid options before seeking private loans. Unfortunately, 47 percent of private borrowers borrowed less than they could have in Stafford loans.
Recently, I heard from college students at Sacramento State University about their struggles with student loan debt. Their comments echoed what I heard from students at California State University, East Bay in January. Californians need the help SB 16 can provide. Statewide student and faculty organizations, and consumer groups throughout California support SB 16.
Providing affordable access to higher education is vital to the future of our state. The passage of SB 16 will assist many Californians struggling with student loan payments and will help them avoid falling further into debt.
It is a pleasure to serve you in the California State Senate.
Senator, 10th District