Three bills aim to repair credit histories of federal student loan borrowers who fell behind

WASHINGTON, D.C. — More than 43 million Americans currently carry student loan debt totaling around $1.75 trillion.


For borrowers who fall behind, the damage to their credit scores can stop them from buying a home, a car or even getting a job.

READ: Report: White House to extend pause on student loan repayments through Aug. 31

Democrats in the House are pushing three bills that focus on repairing the credit histories of federal student loan borrowers who fell behind and then worked to pay off their debt.

“Once you’ve come out of default, that default stays on your credit report, but it shouldn’t because you’ve done your part,” said Rep. Nikema Williams (D-GA), a co-sponsor of the bills. “This legislation is common sense. It will remove that default once you’re current and give you a fighting chance at competing in an economy where you need a high credit score to buy a home, to buy a car.”

The Clean State Through Consolidation Act would remove default records from the credit history of federal student loan borrowers who consolidated their defaulted loans.

The Clean Slate Through Repayment Act would remove any adverse credit history related to a defaulted federal student loan once the borrower paid off the balance in full.

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Lastly, the Student Loan Rehabilitation and Credit Score Improvement Act would remove negative credit reporting on a defaulted federal loan once the borrower completed student loan rehabilitation.

“The debt is too damn high,” said Rep. Alma Adams (D-NC), another co-sponsor of the proposals. “We’ve turned colleges and universities into another barrier that keeps families out of the middle class.”

The push comes as progressives in Congress have been urging the Biden administration to cancel student loan debt for millions of borrowers.

But there are questions about whether the President even has the authority to do that or if it needs to be an act of Congress.

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Canceling student loan debt also faces strong opposition from Republicans.

“I don’t think we should ask those that did not attend college to pick up the tabs for those who did,” said Sen. Chuck Grassley (R-IA) during a hearing in August 2021 about student loan debt. “Debt forgiveness would be highly regressive and overwhelmingly benefit the wealthy at the expense of others.”

Starting May 1, the pandemic pause on federal student loan repayments will end and borrowers will need to begin payments again.

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