President Obama Proposes Student Aid Bill of Rights
Posted By Carrie Wiley on April 9, 2015 at 10:58 am
In a new effort to help clean up the state of student loans and to make college more affordable for American students, President Obama proposed a new Student Aid Bill of Rights last month in a speech at Georgia Tech. The Bill would require the combined efforts of several government agencies to provide students better access to higher education, easier-to-find resources, affordable repayment plans, and reliable repayment information.
New protections for students
The Student Aid Bill of Rights outlines several new areas of protection for student borrowers. The three major points include:
- Streamlined servicing: Right now, it can be tricky for students to keep track of loans that are serviced by different providers – especially when these providers frequently change. The Bill calls for a central portal for students to access their loan information, instead of having to track down multiple lenders.
- Better representation: Currently, if a student is having trouble with their college, lender, or loan servicer, there are a number of agencies for them to turn to for help, but none that directly settle disputes. The Bill calls for a central location for students to voice concerns and solve disagreements.
- Easier income-based options: If a student is on an income-based repayment plan, they must furnish proof of income on an annual basis in order to maintain that plan. The Bill calls for a study to determine the feasibility of an option for students to authorize the IRS to release their financial information for several years to allow continual certification for income-based plans.
Where the Bill falls short
One of the primary causes of trouble when it comes to student loans is borrowing too much. Even if a student obtains employment right after college, loan payments of several hundred dollars a month may be too much to pay along with other household expenses. Unless college costs come down, or students find alternate means of financing education, student loan balances will continue to balloon, and issues will continue to surface.
There are also no provisions for cancellation of student debt. As the law stands now, student loans cannot be discharged via bankruptcy – some lawmakers are calling for a change in these statutes. Some critics also want loan cancellations available in cases of closed colleges and misleading or predatory loan practices. Advocates of this action point to the recent closing of 95 schools owned by Corinthian Colleges, Inc., after increased scrutiny from the Department of Education.
A step in the right direction
While this Bill of Rights will not solve all of the problems that student borrowers face, it does address several important areas and provides clarity for students struggling with confusing repayment structures. There is still more to do if American students are to have access to an affordable education and graduate without staggering amounts of debt. However, incremental solutions over time are steps in the right direction.