Economy & Jobs
New Student Loan Bill Seeks to Empower Borrowers
Are you one of the 40 million Americans who has student loans? If you’re a Millennial, it’s likely that you or your peers (raises hand) are dealing with an average student loan debt of $33,000 or more. If you went to a private school or attended graduate school, that number is probably much higher.
Student loan debt has become a signature of the Millennial generation. As tuition costs continue to rise, the conversation about making education more affordable — and the process of repaying loans less confusing — is in full force. As part of this conversation, there is chatter in the White House about a new student loan bill that seeks to empower borrowers and make the student loan repayment process a bit easier.
Big Promises of the New Student Loan Bill
On March 10, President Obama unveiled his plans for the Student Aid Bill of Rights during an address to students at Georgia Tech. His plan would help ease the process of paying back student loans while also enhancing protections for student loan borrowers.
In the speech, Obama stated, “We’re going to require that the businesses that service your loans provide clear information about how much you owe, what your options are for repaying it, and if you’re falling behind, help you get back in good standing with reasonable fees on a reasonable time line.”
Students Have Rights, Too
Together with the Department of Education, Department of Treasury, Office of Management and Budget, the Consumer Financial Protection Bureau, and the Social Security Administration (among others), the president announced the Student Aid Bill of Rights. This concept is based on four key tenets:
1. All students should have access to a quality, affordable college education.
2. Students should have the ability to find and easily access the resources they need to pay for college.
3. Student loan borrowers have the right to choose an affordable repayment plan.
4. Student loan borrowers have the right to reliable information, customer service, and fair treatment when repaying their student loans.
Essentially, the Student Aid Bill of Rights aims to empower current borrowers and help future generations access affordable education.
The Benefits to Students
How will this new student loan bill actually affect borrowers? Here’s what you can expect:
Federal loan providers will be required to make clear disclosures about who owns their loans, how to set up monthly payments, and how to change plans.
President Obama has asked the Consumer Financial Protection Bureau, the Treasury, and the Department of Education to determine if current bankruptcy laws or other regulations should be expanded to include student loans. According to Reuters, the focus will be on private student loans, which don’t offer the same protections as federal student loans.
The Department of Education will create a new system to respond to borrower complaints and other comments about lenders.
These changes, ushered in by the Student Aid Bill of Rights, should make it easier for borrowers to access information and have more resources for paying back debt. Not only that, but this bill could lead to a system that ensures the proper dissemination of information to borrowers and ensures that borrowers have a voice in the student loan repayment process. It may also assist new college applicants by simplifying the financial aid process and increasing grant money.