President Barack Obama signs a presidential memorandum aiming to clamp down on the private companies that service federal student debt, Tuesday, March 10, 2015, in the Oval Office of the White House in Washington. (AP Photo/ Evan Vucci)
President Obama on March 10 issued and signed a memorandum establishing a “Student Aid Bill of Rights,” part of a suite of actions the administration plans to undertake to make college more accessible.
“One of the things that’s been uppermost on my mind is how do we make sure that every young person in this country who is willing to put in the effort can afford to go to college,” Obama said in the Oval Office while signing the memorandum.
“This is part of it. It’s an executive action that we’re able to take to streamline and improve the manner in which the federal government interacts with students when it comes to student loans,” he added.
More than 40 million Americans have student loan debt at an average of $28,400 in federal and private loans, according to the memo. But, 1 in 8 of federal borrowers default on those loans within three years of graduation.
But, according to the White House’s “Bill of Rights,” every student (1) deserves access to a quality, affordable education at a college that’s cutting costs and increasing learning and (2) should be able to access the resources needed to pay for college. Additionally, students who have to borrow money to finance college (3) has the right to an affordable repayment plan and (4) to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans.
President Barack Obama speaks in the Oval Office of the White House in Washington, Tuesday, March 10, 2015, before signing a presidential memorandum aiming to clamp down on the private companies that service federal student debt. (AP Photo/ Evan Vucci)
To fulfil this vision, the president’s memo directed the Department of Education and other federal agencies to coordinate their efforts and to take several steps to help borrowers afford their monthly loan payments.
Those steps include: Establishing by July 2015 a state-of-the-art complaint system to ensure quality service and accountability for the Department of Education, its contractors, and colleges, and allows borrowers to monitor their complaints’ progress through resolution. The department will also be expected to submit yearly reports analyzing information received and actions taken in the process.
They also involve taking measures to help students responsibly repay their loans, such as helping them set affordable monthly payments and requiring enhanced disclosures from direct loan servicers, as in the case of a loan transfer from one servicer to another; and strengthened consumer protections, such as providing adequate notification of pending defaults.
The White House will also require fair treatment of distressed borrowers. That includes, raising the standards for student debt collectors, including ensuring that they are not charging borrowers excessive fees; and providing clarity on the rights of borrowers in bankruptcy, among several other measures.
Lastly, agencies will be expected to take new steps to analyze student debt trends and recommend legislative and regulatory changes.
For more on the Student Aid Bill of Rights, click here.