This week in Georgia President Obama announced the release of a Student Aid Bill of Rights along with a series of executive actions aimed at helping students who owe student loans held by the government.
The primary components of these actions will be the creation of a centralized complaint system for federal student loan borrowers as well as a single website where they can manage their loan payments.
By next July students and borrowers will be able to file complaints about federal student loan lenders, servicers, collection agencies and colleges and universities. Through this effort students would have the ability to track what is happening with the status of a complaint and the U.S. Department of Education would have aggregate data to use from the complaint system to make decisions regarding performance of its loan services in addition to current metrics the Department collects. Finally the Department will study how it should collect and resolve complaints it receives about colleges and universities.
In addition, the series of executive actions taken by the President include steps to improve and standardize the customer service experience of federal student loan borrowers. For example the Department will establish a single website where all federal loan borrowers can access their account and payment information. The Department also plans to direct its contracted loan services to provide enhance disclosures when their loans are transferred between servicers and to more aggressively reach out when borrowers fall behind in their payments or need help changing repayment plans. Finally the Department will instruct loan servicers to apply prepayments – money a borrower pays in excess of their monthly minimum – to the loans with the highest interest rate, unless the borrower requests otherwise.
Beyond the Department, the U.S. Treasury will look for ways to let borrowers provide multi-year authorization for the IRS to release the income information needed to apply for federal income-based repayment programs.
Finally, the Department will engage a task force to develop regulatory and legislative proposals to help struggling borrowers with both federal and private student loans. One topic that will be considered is a change to bankruptcy law.