Private Student Loan Wage Garnishment is a complex issue. It balances the interest of individuals who are unable to repay expensive school debt against powerful business interests who profit from running private “for profit” schools.
Private Student Loan Wage Garnishment: Relief in Sight?
Here is the news about Private Student Loan Wage Garnishment. California Assembly Bill 233 – Will wage garnishments end on student loans in California?
The answer is, Not at This Time. Here’s what has been going on.
There is proposed legislation. It is called, Protecting pay checks from garnishment by private student loan lenders.
Here is the status of the legislation. AB 233 passed the Assembly, but failed to gain State Senate approval. As things now stand, AB 233 has been put on hold in the Senate. It may be reconsidered again by the Senate in January 2014 without the necessity of being refiled in the Assembly. The bill is authored by Assemblyman Bob Wieckowski, of Frement, California. The proposal would be a godsend to end abusive student loan collection tactics.
I am informed that once AB 233 reached the Senate, it ran into enormous opposition from lobbyists of the California Bankrer’s Association. They are the ones who killed it. Assemblyman Wieckowski is considering changes to the bill that might give it a better chance of passage. I personally discussed it with his staff. Private student loans are predominantly originated at what we used to call “vocational trade schools.”
I note that such institutions have mostly renamed themselves “private universities.” I offered a suggestion that would prevent wage garnishment for private student loans that originated at schools with a high rate of loan defaults. Such a measurement may be indicative that the schools in question are diploma mills where little or no useful education has taking place. Thus, the students who incurred private loans attending such institutions should be protected from exploitation to repay loans incurred for a useless education. This would force the private lenders to partner with the students to assure that the education received translates into valuable market skills for the students who emerge from such schools. Do you agree? If so, let your state legislators know how you feel!
Student loan help, like that offered by AB 233 is important to compensate for the lack of an adequate bankruptcy remedy. Dischargeing student loans in a bankruptcy case will be difficult, and expensive.