Obama to offer help for student borrowers

Written By limadu on Selasa, 10 Maret 2015 | 22.16

In a speech at Georgia Tech in Atlanta, Obama will outline changes in how the government oversees federally-backed education loans and unveil new ways to help students repay debt.

The president will direct the Department of Education to develop a new system for students to file a complaint when there's a problem with their loans.

The goal is make it easier for students to provide feedback and make the DOE, loan servicers and colleges more accountable.

Obama will also outline a number of steps aimed at helping students repay their loans, such as requiring loan servicers to be more proactive with flagging borrowers when they fall behind on a payment.

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There will be a central "point of access" where students can find information about their federal loans.

To help students pay off more expensive loans, the loan servicers will need to apply payments to the loan with the highest interest rate first, unless the borrower says otherwise.

The administration will ensure that debt collectors do not charge student borrowers excessive fees and help them get back on track when a loan is past due. It will also clarify how student debt is treated in bankruptcy court and will work with the Treasury Department to help students with income-based repayment plans.

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Obama will also call on government agencies to analyze student debt trends and propose regulatory changes.

It's part of what Obama calls a Student Aid Bill of Rights, a set of priorities that he says will help ensure that all Americans have access to affordable and high-quality education. The steps are relatively modest since Obama has limited power to overhaul student loan policy without the help of Congress.

Obama has also proposed more sweeping measures, like making the first two years of community college free for students that maintain a certain grade point average. He also raised the maximum Pell Grant award by nearly $1,000 to $5,730 a year and created a new tax credit to help families pay for college.

Related: 10 most expensive colleges

Student debt is one of the biggest economic problems facing the country today.

Higher education is considered the key to a successful career, but many graduates end up struggling to get by because much of their extra income goes to pay down student loans. This can impact their ability to buy a home, start a family and save for retirement.

The White House says 70% of those who earn a bachelor's degree graduate with an average debt load of $28,400 at public and non-profit colleges. Overall, more than 40 million Americans have student loans.

Related: Colleges with the highest-paid grads

Related: Drowning in student loan debt

CNNMoney (New York) March 10, 2015: 10:45 AM ET


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