A student loan default is one of the most damaging marks a person can have on their credit report. For many, this record remains a barrier to financial stability long after they have fixed their financial situation and paid off their debt. This bill matters because it provides a clear path for people to 'earn' their way back into the good graces of the financial system.

If this becomes law, it creates a major incentive for borrowers to settle their old debts in full, as the reward is a significantly higher credit score. Without this law, many borrowers feel like there is no point in paying off a defaulted loan since the negative mark stays on their record for years regardless of whether they pay it back.