Senate Banking Committee Chair Tim Johnson (D-S.D.) is concerned about the economic impact of student loans on borrowers and their families and has called several government agencies to take coordinated action to address those issues, especially loan servicing and debt collection.
In letters on Wednesday to U.S. Department of Education Secretary Arne Duncan, U.S. Department of the Treasury Secretary Jack Lew and Richard Cordray, director of the Consumer Financial Protection Bureau, Johnson urged the agencies to undertake a "serious study of the market for refinancing student loans and develop a plan to enable borrowers to take advantage of the current low interest rate environment."
"While college still represents one of the surest paths to the middle class, rising student loan debt makes it increasingly difficult for graduates to buy a house, start a business or save for retirement," Johnson wrote.
He added, "In my home state of South Dakota, one of the states with the highest proportion of students graduating with debt, nearly three-fourths of graduates finish school with over $25,000 in debt."
Johnson's letter also called for additional reforms to the student loan market, including "requiring more transparent disclosures to students before taking on student loan debt, mandatory certification for private student loans, release of co-signers upon the death or disability of a borrower, and improved credit reporting for education loans."
Althougha mounts vary by state, the average student loan debt averages just shy of $30,000 for members of the class of 2013, according to a report from The Institute for College Access & Success, an independent, nonprofit organization dedicated to making higher education more accessible and affordable for students of all economic backgrounds.
Depending on the school, the debt ranged from $2,500 to $71,000 per student, TICAS reported.
"Clearly more needs to be done to create enforceable consequences for servicers that do not comply with their responsibilities," Johnson wrote. "Servicers are expected to treat borrowers fairly and transparently, which includes ensuring loan information is correct, fees are accurately assessed, and borrowers are given all relevant information about their loans."
As chairman of the Senate Banking Committee, which has jurisdiction over financial institutions in the student loan market, Johnson also has held several hearings on ways to address existing and future student financial products.
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