President Obama Unveils "Student Aid Bill of Rights"
Yesterday, March 10, President Obama unveiled his Student Aid Bill of Rights in a crowded gymnasium of nearly 10,000 college students at Georgia Tech. He said in his speech that "Higher education is one of the best investments that anybody can make in their future, and it's also one of the best investments anyone can make in their country's future." To that end he signed a Presidential Memorandum, a Student Aid Bill of Rights that aims to ease the student loan debt burden some students face after graduating college.
The White House said 40 million Americans have student loans. More than 70 percent of U.S. students who graduate with a bachelor’s degree leave with debt, which averages $28,400 and that student debt exceeds $1.1 trillion, with around 7 million Americans in default on their student loans.
The presidential steps aim to crack down on a student loan system known its complexity. In recent years, lawsuits and government reports have shown industry abuses and the many difficulties facing borrowers when they try to contact lenders, or refinance their debt. President Obama has asked the Treasury and Education departments and the Consumer Financial Protection Bureau to report by Oct. 1 on whether bankruptcy laws or other laws or regulations should be changed for student loans. He will also direct the Education Department to create a system by July 1, 2016, to better oversee and address complaints from borrowers about lenders, servicers and collection agencies, the White House said.
The Presidential Memorandum directs cabinet agencies to:
- Create a single website where borrowers can see all their federal loans in one place — a major problem for students with multiple loans or loans that have been sold from lender to lender. This could also include a centralized, easier process for repaying loans.
- Develop a state-of-the-art – and simple – process for borrowers to file complaints involving their federal student aid, and taking action on those complaints.
- Ensure the banks that service federal loans are held to high standards and provide better information to borrowers;
- Track debt collectors to make sure that fees charged to borrowers are reasonable and that collectors are fair, transparent, and help borrowers get back on track.
- Work to improve borrowers’ experience and customer service by getting multiple agencies to work together and drawing on lessons learned from similar situations
- Investigate possible changes to regulations and legislation, including bankruptcy law, that may be necessary to protect borrowers – regardless of the type of loan they have.
The Whitehouse said "The Student Aid Bill of Rights builds on the efforts our Administration has been taking over the last several years to make college more affordable and continues to chip away at the burden of student debt – so no one should feel overwhelmed by their student loans.”