President Barack Obama on Tuesday signed a memorandum that calls for the government to make it easier and fairer for the nation’s 40 million people with student loans to pay them back.
The president called for a “Student Aid Bill of Rights” that says everyone should be able to have access to “affordable, quality” higher education and have affordable loan repayment plans and fair treatment from companies that service the loans.
“We’re going to 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,” Obama said at an appearance Tuesday at Georgia Tech.
“And if you’re paying stuff off, you should be paying off the high-interest loans first, not the low-interest ones. We’re going to take a hard look at whether we need new laws to strengthen protections for all borrowers, wherever you get your loans from,” he added.
The emphasis on student loan repayment comes as the rising cost of public and private colleges force most people to borrow. More than 70 percent of people who earn a bachelor’s degree graduate with debt, which averages $28,400 and public and non-profit private colleges and universities.
The memorandum tells the Department of Education to set up a web-based system for student loan complaints by July 1, 2016. It also tells the department to study how other complaints about colleges and universities, such as poor educational quality, could be collected and resolved.
Some other highlights:
Student loan servicers must provide better disclosures to borrowers and strengthen consumer protections.
Borrowers will be able to authorize the IRS to release income information for multiple years in order to determine monthly payments under income-based repayment plans, instead of having to get the information every year.
A central website will be set up where borrowers can manage all their loans.