President Obama Has Ambitious Plans for Your Student Loans
If you feel like gripes about your unmanageable student loans have fallen largely on deaf ears, at least you know the White House is listening: On Tuesday, Obama signed a memorandum that would give borrowers greater consumer protections.
The Student Aid Bill of Rights proposes a series of changes, including the ability to discharge college debt in bankruptcy and reining in exorbitant fees for college debt that has gone into collections.
Some consumer advocates have heralded the bill as a much-needed step to reduce the nation’s massive student loan burden, which now exceeds $1.3 trillion. Meanwhile, the average college grad leaves school with nearly $30,000 in debt, and more than 11% of student-loan borrowers missed at least one payment in the fourth quarter of 2014.
Other experts say the bill doesn’t go nearly far enough to address the root cause of the issue: skyrocketing tuition.
According to one estimate, the cost of college has risen a whopping 538% since 1985—and tuition is only expected to increase in the coming years. At the same time, state and federal funding for public institutions has decreased since the recession.
“Unless the Administration and Congress act urgently to constructively address escalating college costs … the debt burden will inevitably escalate,” the American Association of State Colleges and Universities said in a statement.
Other major changes included in the new proposal are: creating a centralized website to help students track multiple loans; giving low-income and disabled borrowers more options to pay back or discharge their loans; and instituting a feedback system that lets borrowers file complaints about lenders and collection agencies.
One thing notably absent from the bill? A clear timeline for when most of the changes would take effect. While the bill is a presidential memorandum and doesn’t require Congress’ approval, it’s unclear how long it will take the government to put these proposals into action.
In the meantime, if your debt burden seems like too much to handle, check out our complete guide to paying student loans.