President signs memorandum for “Student Aid Bill of Rights”

Thursday, March 12, 2015

President Obama announced his "Student Aid Bill of Rights" on Tuesday by way of signed presidential memorandum. Though Congressional action isn't needed to make the president's proposed small changes in the student loan program, the Bill of Rights outlines important policy actions aimed to provide relief to the 40 million Americans dealing with student loans.

As students increasingly rely on student loans to help pay for college, many find themselves crippled by debt once they graduate. Today, more than 70 percent of those earning a bachelor’s degree graduate with debt—an average of $28,400 at public and non-profit colleges. The president's memorandum outlines his plan to make education more affordable, while also highlighting the need for regulatory change that targets student loan servicing companies that are overseen by government agencies, including the Department of Education, the Consumer Financial Protection Bureau and the Internal Revenue Service.

The president will announce a series of steps to improve customer services and help borrowers repay their direct student loans, which are made with federal capital and administered by the Department of Education through performance-based contracts. The memo targeted the third parties, or servicers, who have been awarded these contracts to collect the loans, including Navient (formerly Sallie Mae). Servicers will be required to provide better information regarding borrowers' repayment options and also will be required to go to further lengths to notify borrowers when their account reaches delinquency.

President Obama has ordered the Department of Education to take steps by 2016 to make things simpler and easier for student borrowers. The president said the federal government will now “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 timeline.”

The four principles of the Student Aid Bill of Rights are:

I. Every student deserves access to a quality, affordable education at a college that’s cutting costs and increasing learning.   
II. Every student should be able to access the resources needed to pay for college. 
III. Every borrower has the right to an affordable repayment plan. 
IV. Every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans.