Clean Slate through Consolidation Act

Key Points

• This bill would require credit bureaus to remove the record of a federal student loan default from a borrower's credit history once they consolidate that defaulted loan into a new Federal Direct Consolidation Loan.
• The bill amends the Higher Education Act of 1965, specifically the section governing Federal Direct Consolidation Loans, to add this new consumer reporting requirement.
• The responsibility for contacting credit bureaus falls on the Department of Education, the guaranty agency, or the loan holder rather than on the borrower. This removes a major burden from people trying to rebuild their financial standing.
• By erasing the default mark after consolidation, the bill creates a strong incentive for borrowers in default to re-engage with the repayment system. A default record can block access to mortgages, car loans, rental housing, and even some jobs for years.