President Obama’s latest effort to improve student lending has a catchy-sounding name — the Student Aid Bill of Rights — and it’s garnering praise from consumer advocates and Congressional Democrats.
But does it actually alter the student-lending landscape? Yes and no.
The “bill of rights,” and an accompanying memorandum that the president announced on Tuesday at the Georgia Institute of Technology, will make it a little easier for borrowers to stay current on their debt payments and to file complaints against the companies that manage their loans.
But the president’s steps won’t ease students’ debt burdens or make it easier for struggling borrowers to discharge that debt. And they don’t fundamentally change how the government services student loans.
Here’s a rundown of what the memorandum does, what it doesn’t do, and what we still don’t know about the plan:
What It Does
Help borrowers keep track of their student loans. For years, consumer groups and colleges have been warning that borrowers with more than one servicer are losing track of their loans — and winding up in default as a result. The Education Department acknowledged those concerns last fall, when it adjusted some institutions’ “cohort default rates,” or the share of borrowers who default on their loans within a certain time frame…read more