The biggest change for student loans in years is President Obama’s Student Aid Bill of Rights. This is an exciting bill that changes student loans in many key areas. President will be signing a new Presidential Memorandum which will direct the Department of Education as well as other key federal agencies to do more to help borrowers afford their monthly loan payments. It is also setting up a complaint system to help keep tabs on any issues with the Department of Education, its contractors, and colleges. These complaints will actually be looked into and where needed the Federal government will intercede. It also aims to help students set up affordable payments for their student loans, and indeed already cap their student loan payments at 10 percent of income. The bill also aims to do extensive yearly studies of student debt load so that the government may make legislative and regulatory changes where and when needed.
The bill also includes the following, which is take directly from the White House website:
A Student Aid Bill of Rights
I. Every student deserves access to a quality, affordable education at a college that’s cutting costs and increasing learning.
II. Every student should be able to access the resources needed to pay for college.
III. Every borrower has the right to an affordable repayment plan.
IV. Every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans.
The bill aims to better assist students in tackling their student debt load in a era where more than 70% of those who earn just a bachelor’s degree end up with an average debt load of $28,400 at public and non-profit colleges. The bill also aims to improve student loan servicing.
The complaint system will be via a new website founded by the Secretary of Education by a date no later than July 1, 2016. The goal of the website is to give students a central location to provide feedback and log complaints against federally back student loan lenders, servicers, collections agencies, and institutions of higher education. They also plan to take action on misleading claims which are running rampant in today’s college world.
The big thing being done with this act is to help borrowers afford their monthly payments. Many of the loan processes are now changing such as when federal student loans are transferred from one servicer to another or when when borrowers begin but do not complete applications to change repayment plans. The bill also ensures that lenders apply prepayments towards any loans with the highest interest rate first unless directed otherwise from the student in question. Also a central location for repayment online is being made that covers ALL service providers for federal student loans, which will allow for access to account information and repayment options all in one standard location for any Federal student loan servicing contractors.
If you are going for a student loan or are in the process of repaying a student loan you should get familiar with all the new rights that have been accorded to you. I fully expect the year 2016 to herald even more changes with the Federally funded student loan programs across the country as the president has made it an ongoing part of his agenda.