ASSEMBLY//LEGISLATIVE UPDATE | College graduates saddled with enormous debt following is a growing problem in an economy with little remorse for their inability to find suitable employment to pay back creditors.
Alleviating this seemingly perverse divestment in young people’s future continues to be a major theme in Assemblyman Bob Wieckowski’s stack of bills offered this year. Four bills comprise what Wieckowski calls the “Student Bill of Rights.”
Rules for paying back federal loans have built-in safeguards protecting borrowers and allowing for deferments for those navigating troubling patches of financial turmoil. Loans offered by private lenders, however, have fewer protections. But, Wieckowski, who represents Fremont and portions south to San Jose, wants students to first be better prepared before they even sign loan documents.
AB 391 would require the state Department of Education to add curriculum standards helping students better understand basic financial matters, such as budgeting and saving their money, loans and credit, identity theft and options for paying for college. California is just one of four states that do not include instruction on personal finance, says Wieckowski.
The “Know Before You Owe Act,” AB 534, takes the next logical step placing federal requirements for understanding the terms of private student loans. Wieckowski hopes have students avoid situations where they unwittingly seek private loans with exorbitant interest rates without a basic understanding of the loan agreement.
Once entangled in debt from private loans, AB 233 would prevent wage garnishment eating away large chunks of their income. According to the bill, the action also encourages lenders to seek more lenient repayment plans with borrowers.
In addition, the “Financial Fresh $tart Act” is a joint resolution urging the President and Congress to allow student loan borrowers to discharge their debt in bankruptcy proceedings. Since 2005, those in Chapter 7 and 13 bankruptcy, can no longer seek to wipe clean their student loan debt.