Obama Announces Student Aid Bill of Rights

Earlier this week, President Obama recently announced at the Georgia Institute of Technology, will make it a little easier for borrowers to stay current on their debt payments and to file complaints against the companies that manage their loans. According to the Chronicle of Higher Education, his memorandum does the following:

• Help borrowers keep track of their student loans.
• Make it easier for borrowers to file complaints involving their student aid.
• Help borrowers remain in income-based repayment plans.

It will NOT overhaul the student-loan debt collection process or provide an escape hatch for defaulters. Furthermore, no one knows how the government will specifically "raise standards" for debt collectors. The memorandum requires the U.S. Department of Education to "ensure that the debt-collection process for defaulted federal student loans is fair [and] transparent, charges reasonable fees," and "effectively assists borrowers in meeting their obligations and returning to good standing." The expected consumer protections include "higher standards for student-loan servicing," including "enhanced disclosures" and "strengthened consumer protections." The only protection listed is ensuring that servicers apply prepayments to loans with the highest interest rates first. More information will be made public as soon as the reports are released on private debt collectors.

Click here for more information about the Student Aid Bill of Rights from the White House.