Obama, White House officials announce executive action for new Student Aid Bill of Rights
President Barack Obama announced an executive action that will offer greater consumer protections for students paying back academic debt.
Obama unveiled the "Student Aid Bill of Rights" at the Georgia Institute of Technology March 10, and discussed the measure during a conference call with Central Michigan Life and other student newspapers across the country March 11.
The Student Aid Bill of Rights, Obama said, would help set a standard of values for lenders and collectors as they interact with borrowers who might have trouble paying back their loans.
"Yesterday I took new action that streamlines and improves how the federal government interacts with students when it comes to student loans, and helps students cut through the bureaucracy and get faster responses about their loans," Obama said. "We're going to have to do things on the federal level, the state level and at the university level to really mobilize the entire country on this issue of college affordability."
President Obama's "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.
Obama called his action a "set of principles that declares simple values that we want everyone to sign up for." The action also calls for loan repayment assistance measures, like a new federal complaint system for borrowers and a new system for setting up payments.
Other measures include tracking state student debt data for reference, which Obama hopes could jump-start legislative and regulatory changes to lower student debt.
The new complaint center will act as a one-stop destination for students to keep tabs on their outstanding debt, said U.S Secretary of Education Arne Duncan.
Duncan joined Obama on the conference call to answer questions, along with Under Secretary Ted Mitchell and James Kvaal, the deputy director of the White House's Domestic Policy Council.
During his conference call with student journalists, Obama stressed the importance of grants, work study programs and other forms of financial aid as being essential to affording higher education. He estimated the average student walks away with more than $28,000 in debt after four years of college.
According to information released by White House staff, there were 1.5 million Michigan students receiving direct loans to pay for college as of January 2015. The total outstanding loan debt for borrowers in Michigan is $40 billion.
This equals about $26,000 of debt per borrower in Michigan.
"One thing that continues to worry (both the president and I), and students and their families around the nation, is the cost of attending college," Duncan said. "We want you to hold us accountable for that. We also want to challenge states to reinvest in higher education. When they cut their investments, universities then jack up their tuition."
Duncan added universities have to do a better job of maintaining costs by being more efficient with their use technology on campuses. Until they can get everyone on board to make front end changes to student aid, Duncan said this new action will help students on the back end when repaying their loans by making it more simple and fair.
The complaint center will be up and running by July 2016, Duncan said. He did not set a timeline for when collection fee changes will be implemented. Changing fee and interest rates would require some action from Congress, and there has been little movement on that front, he said.
Any funding for the department of education and the federal government to offer more financial aid would also take an act of Congress.
Because the measure is an executive order, some reporters questioned about potential push back from state legislators and Congress. Mitchell said there has been no opposition to the action at this time, and for the most part, the measure is being greeted with enthusiasm.
Even without changes to fees, the new action will review federal debt collection contractors based on their performance, Mitchell said.
The performance rubric is based on how successful each institution has been with helping students repay their loans. Already, the education department officials have cut ties with five previously contracted collectors because of unethical practices. Neither Mitchell nor Duncan shared which contractors were cut.
When asked how they'll get states to reinvest state aid after years of massive cuts, Duncan and Mitchell did not share specifics. Duncan did admit that getting states as partners would be the biggest challenge moving forward.
"When we invest, we want to supplement, not supplant, and any program we put in place as memorandums and agreements, (we have to make sure) we only invest in states that are holding their end of the bargain," Duncan said.