The difficulties of paying back student loans are about to get a whole lot easier to manage. President Obama signed a Student Aid Bill of Rights memorandum yesterday that promises to help students not only parse the conditions of their student loans but find the best methods to help pay off those debts. The Student Aid Bill of Rights offers four grand declarations:
- Every student deserves access to a quality, affordable education at a college that’s cutting costs and increasing learning.
- Every student should be able to access the resources needed to pay for college.
- Every borrower has the right to an affordable repayment plan.
- And every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans.
Each section of the bill builds off of previous policies, such as increasing the maximum Pell Grant amount by $1,000, and helps establish new methods of helping students as well. For the first Bill of Rights declaration, the president is looking to establish a national college rating system that makes it easier for parents and students to choose the best institution that fits their needs while also working towards his previous goal of making community college free to those who work for it, as per his State of the Union address.
The second declaration includes that aforementioned Pell Grant increase as well as a proposal to simplify the Federal Student Aid application. Regarding additional monetary incentives, the fed is offering up to $10,000 spread out over four years for families looking to help put their children through college via the American Opportunity Tax Credit. According to a White House press release, over 25 million families are eligible to reap the benefits of the AOTC.
Perhaps the most welcome news of all is what an "affordable payment plan" means to students who may be struggling with student loan debt, which on average totals $28,400 per undergraduate. President Obama has established a Pay As You Earn plan that limits federal loan payments to 10 percent of borrowers' incomes. This goes hand in hand with the Student Aid Bill of Rights' final point of providing comprehensive customer service to borrowers who previously had to navigate a system of multiple private collections agencies with little transparency and minimal guidance as to which repayment methods work best for them.
The federal government is working to establish an all-in-one website that helps students track their loans, while also attempting to minimize the use of private collectors and instead use federal parties. Such a decision would help to alleviate the confusion of receiving loan information from multiple entities, which Student Loan Borrower Assistance Project Director Deanne Loonin says has proved disastrous in the past:
Dispute resolution is, obviously, not the primary mission of loan collection agencies. Debt collectors are not adequately trained to understand and administer the complex borrower rights available under the Higher Education Act, and the government does not provide sufficient oversight of their activities.
Loonin's statement regarding private collection agencies dates back to 2010, indicating that the Student Aid Bill of Rights has been a long time coming.
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