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  • Implications of President Obama’s ambitious plan to protect student loan borrowers
  • Posted By:
  • Chris J
  • Posted On:
  • 13-Mar-2015
  •  A couple of day’s back, our President unveiled a plan to ensure that student loan borrowers did not have to carry a huge burden as they have been doing. This plan will make it much easier for students to repay their loans.

    This student aid bill or rights was unveiled at Georgia Tech and the event was attended by over 9500 people. The plan includes giving the ability to keep track of multiple loans through creation of a website. It also includes making it mandatory for companies servicing student loans to be more forthcoming with information on loan handling.

    In his speech at the McCamish Pavilion, our President said that this is a point of time when higher education is extremely important yet most expensive. For some time, he has been trying to improve higher education access towards which he announced an intention to offer free community college education. His other efforts have been to cap student loan repayments at 10 percent of the income of the borrower.

    In his statement to the reporters in Washington, Obama said that his aim was to find ways to provide access to affordable education for students who are keen on going to college. More transparency will now be required of the middlemen interacting with borrowers for federal loan repayment.

    According to the plan, students must be kept meticulously informed by borrowers on payments and delinquency. To make sure that the borrowers are not unduly charged any extra fees, companies will be required to work closely with those who are behind payments. Unless instructed by the borrowers, payments must go towards servicing loans of highest interest rates.

    Companies must keep borrowers informed about transfer of loans from one service provider to another and help them avoid falling behind. He agreed that student debt issue is mammoth and this issue cannot be fixed with a silver bullet. However, he said that he will be looking at putting in place laws to strengthen borrower protections.

    A study will be conducted by administration officials on whether there would be any need for bankruptcy law changes. While other debts such as credit card balances and mortgages can be discharged with bankruptcy, student loans cannot be done so.

    He also proposed reviews for changing regulations and statues with regard to flexibility of repayment options. A centralized website will be the source of information for borrowers where they will have the ability to file complaints against schools, lenders, student loan servicers and collection agencies.

    Obama also urged students to try and change the system with regard to educational loans through organized campaigns. He said that a coalition across the country has to be mobilized starting with students themselves.

    He has always been saying that when he looks at the students of America, he sees himself. Both he and his wife Michelle Obama took years to pay out their student loan debts. He said that when they were supposed to be saving for their daughter’s education, they were still paying out their loans.






 

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