In a speech he’s scheduled to give on Tuesday at the Georgia Institute of Technology, President Obama will announce a Student Aid Bill of Rights and sign a presidential memorandum directing federal agencies to take steps to help borrowers repay their debt.
The memorandum will require the Education Department to create a new complaint system in which borrowers can log grievances against lenders, loan servicers, collection agencies, and colleges. It will also establish a central portal where federal borrowers can view information about all of their loans, regardless of their servicer.
The memorandum will also require loan servicers and debt collectors that work under contract with the department to change how they operate. Servicers will have to provide "enhanced disclosures and stronger consumer protections" throughout the repayment process, and ensure that prepayments are first applied to loans with the highest interest rates. Debt collectors will need to ensure that their fees are reasonable and to help borrowers return their loans to good standing, among other things.
In addition, the president will direct his cabinet and advisers, along with the Consumer Financial Protection Bureau, to study whether consumer protections recently applied to mortgages and credit cards should be extended to student loans. The agencies will also be charged with recommending statutory and regulatory changes for all borrowers, "including possible changes to the treatment of loans in bankruptcy proceedings and when they were borrowed under fraudulent circumstances," according to a fact sheet released on Monday.
Read more at The Chronicle of Higher Education: http://chronicle.com/article/Obama-to-Expand-Protections/228353