No big deal, eh? We think not.
This morning on Good Morning America, resident financial guru Mellody Hobson did a spot on student loan consolidation. While the linked article on the GMA website mentions the one-time cosolidation rule in passing, Ms. Hobson mentioned it a bit more in her spot this morning, stating that it was a drawback that wasn't really a drawback, since it's so unlikely that rates will go down once a borrower consolidates. As we know, however, thousands of borrowers beg to differ.
More articles have come out regarding the effects of student loans on the lives of borrowers long after graduation, including one from The Arizona Republic, one in The Columbus Dispatch, one in the Times-Tribune of Scranton, PA, and one in USA Today.
There's some good news for first-time consolidators, however, in the form of the repeal of the single holder rule. This allows borrowers to shop around for the best deal on consolidation, instead of requiring them to consolidate with their original lender. A step in the right direction, to be sure.
In other legislative news, Senator Clinton has introduced S. 3255, The Student Loan Bill of Rights Act of 2006, which is another step in the right direction, but still seemingly doesn't address the issue of allowing refinancing of previously consolidated loans. One lender has decided to take matters into its own hands on this issue, and has filed a lawsuit in the U.S. District Court for the Southern District of New York against the Department of Education and Secretary Margaret Spellings: "The lawsuit requests a temporary injunction against a ruling that eliminated some consolidation options on March 31, three months before the July 1 deadline. The suit also challenges the constitutionally of the Higher Education Act, the congressional bill that brought about these changes, because the House and the Senate did not pass identical forms of the bill."
*National Student Debt Clock is up to over $422 billion.