New Student Loan Reform Enacted

You wouldn’t look closely at Public Law No. 115-174, but if you did, you would see amendments to the “Truth in Lending Act.” If you have student loans, you’ll want to continue reading this.

Co-Signer Changes ‘Forbearance’

The laws governing student loans and cosigners have long been debated. Below are the changes that were recently made to student loan regulations: The new reform prevents lenders from declaring a default against a borrower if a co-signer declares bankruptcy or dies. Co-signers are no longer obligated to pay off a student loan debt if the student dies.

These new laws only apply to loans provided after November 20, 2018. If you are a cosigner on a student loan prior to this date, the old laws still apply to you. Spouses are also not free from debt obligations as cosigners under this new law. If you acted as a cosigner for a spouse, you are still responsible for paying off that debt.

Credit Reporting Changes

Section 602 of this law also includes some changes to student loans - those changes are as follows: Students that have successfully completed a loan rehabilitation program (student makes a certain number of on-time payments in order to show good faith) can request that all negative credit reporting information is wiped from their record.

Private Loans Exempt

If you have private student loans, you should know that those lenders are not subject to the same laws or amendments. Private lenders do not have to offer rehabilitation programs, and lenders are not legally required to remove negative marks from a person’s credit report - regardless of whether or not a request to have this information removed has been made. We would also like to caution you against entering into a rehabilitation program offered through a private or public lender. In many cases, agreeing to such a program can result in reinstating the statute of limitations period, which may subject you to a lawsuit.

If that period of time has passed, lenders cannot legally sue you for any amount. It is best to consult with an attorney if you are considering whether or not a rehabilitation program is within your best interests.