WASHINGTON, DC – U.S. Congressman Josh Gottheimer (NJ-5), during a Financial Services Committee hearing with student loan experts on Tuesday, called for solutions to greater protect student borrowers, to hold student loan servicers accountable, and to tackle the $1.5 trillion student debt crisis plaguing our nation.
The hearing comes as more and more Americans are defaulting on their loans, creating long-term financial consequences for both recent graduates and our national economy. In New Jersey, 61% of students graduated with student loan debt in 2017, and 47% of 18-34 year olds in New Jersey are living with their parents — the most in the nation. The Federal Reserve stated recently that roughly 20% of the decline in homeownership among young adults can be attributed to the hefty increase of student loan debt.
“Homeownership can be an incredible way to achieve the American dream, and I’m worried that not enough households are building wealth through homeownership due to increasing student debt. By forcing students to start paying back their loans right after graduation, we are setting our graduates up for failure. A ten-year repayment plan is the most common student loan repayment plan, but it usually takes several years at least after graduation to reach a point where a degree is paying financial dividends,” said Congressman Josh Gottheimer (NJ-5). “Finally, student loan servicers are increasingly omitting or misrepresenting information. We need to be creating clear rules of the road to better protect our student borrowers.”
The Financial Services Committee has put forth a bill that would direct the U.S. Department of Housing and Urban Development to work with the Consumer Financial Protection Bureau and Federal Housing Finance Agency to review the barriers to homeownership for borrowers with student loan debt and make recommendations for policy changes that will responsibly reduce or eliminate these hurdles.