This post comes from Christine DiGangi at partner site Credit.com.
President Obama issued an executive memorandum Tuesday to the Department of Education and other federal agencies to do more to help student loan borrowers afford their debt payments. He’s calling it the Student Aid Bill of Rights.
It addresses some big issues, like making payments more affordable and giving borrowers a simple way to provide feedback on their loan experiences. However, experts say that these rights cover only some of the problems borrowers encounter, and that it will take time to see how this executive action plays out for student loan borrowers.
“These things aren’t going to immediately improve the economic drag that student loan debt has on the economy,” said Chris Lindstrom, higher education program director at U.S. Public Interest Research Group (PIRG). “There’s any number of outstanding questions that are definitely not spelled out in detail … but we’re optimistic that we can at least follow through on a set of these things and make them happen before the president leaves office.”
With that in mind, here are the main points outlined in this bill of rights. (Note: Despite the use of the word bill, this is not legislation.)
A Student Aid Bill of Rights
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. And every borrower has the right to quality customer service, reliable information and fair treatment, even if they struggle to repay their loans.
This presidential memo also says the Department of Education will now be responsible for making sure servicers apply overpayments to the loan with the highest interest rate, therefore relieving borrowers of that burden. Currently, there’s no way for borrowers to refinance through the federal student loan program, and the only way to pay less interest in the long run is to make more than your minimum monthly payment and request your servicer apply that payment to your highest interest rate loan. However, borrowers have reportedly complained that servicers don’t always follow those instructions.