This month, the Senate passed a bill rolling back reforms enacted after the financial crisis. Despite calls for an open and transparent process, the bill was passed without debating a single amendment. The result was a bill that does little for consumers, and the Consumer Federation of America issued an analysis along with its opposition to the bill.

Last year, CFA published an analysis revealing that over 1 million borrowers had defaulted on their federal student loans in 2016. In addition, numerous regulators and states have pursued enforcement actions against other major student loan companies, like Navient.

Proponents of the Senate bill noted that it included “consumer protections” for student loan borrowers. The provisions included:

• Financial literacy. The bill directs the Financial Literacy and Education Commission (FLEC) to study and pursue financial literacy best practices for student loan borrowers. However, according to public records, FLEC already studied this five years ago. In addition, the Consumer Financial Protection Bureau (CFPB) already launched financial education initiatives for student loan borrowers, under its own statutory mandate.
• Private student loan rehabilitation. The bill also includes language championed by the largest student loan industry player, Navient. The bill would amend the Fair Credit Reporting Act to give private lenders a new way to report plans that cure student loan defaults. However, unlike the Higher Education Act requirements for federal loans, private lenders would not be required to offer borrowers rehabilitation plans.
• Auto-defaults. In 2014, the CFPB uncovered a dangerous practice used by private student lenders, called “auto-defaults,” where a borrower would automatically be put into default if a co-signer died. The Senate bill restricts private student lenders from engaging in this practice. However, in 2016, the banking lobby representing all major private student lenders informed the CFPB it would be discontinuing this practice. The Senate bill appears to be solving a problem that the CFPB has already fixed.

In our view, these provisions were included so that the bill’s proponents could pretend that there was meaningful action to attack our country’s serious student loan issues. In reality, the Senate’s bill would do virtually nothing to address the massive levels of student loan defaults and servicing abuses. While this bill has not yet been passed by the House, it is important for the public to know that help is not on the way for America’s student loan borrowers.