Many of our readers are in the process of reviewing their award letter and calculating the amount of debt it will take to put their child through college. Five years ago, President Obama started the student loan reform. The Obama Administration has continued to work toward helping student loan borrowers stay current on their loans and prevent default. In March, the President announced the Student Aid Bill of Rights, as a continuation of the student loan reform. The goal of the Student Aid Bill of Rights is to better serve student loan borrowers, remove confusion around the student loan process and make sure student loan borrowers get fair treatment as they repay their loans. The Department of Education in conjunction with the U.S. Department of Treasury and the Consumer Financial Protection Bureau will work together to help bring this new vision to over 40 million Americans with student loans.
As put forth from the White House the Student Aid Bill of Rights is as follows:
- Every student deserves access to a quality, affordable education at a college that’s cutting costs and increasing learning.
- Every student should be able to access the resources needed to pay for college.
- Every borrower has the right to an affordable repayment plan.
- And every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans.
One way the President wants to help borrowers is by taking steps to improve and change the current student loan customer service. The goal is to have a new website completed by July, 2016. This new website will create a responsive student feedback system for borrowers. The goal is to increase reliability and quality of the information. Currently, it can be confusing especially as a person navigates the many avenues it takes during the repayment and consolidation of their loans. Finding the most beneficial loan repayment option can often be difficult to determine. This is especially true as people’s lives change.
The US Department of Education is working to build a new loan serving system that will be more user-friendly and a single online loan management platform. The hope is that this higher-quality system will provide the customer service that borrowers need when they have questions. The DOE wants borrowers to get fair treatment as they repay their loans and this new system has this as one of its goals. Under the current system there are four major loan servicer and about 20 smaller servicers. There have been some inconsistencies among the servicers with quality of service, answers of questions and collection practices.
Some of the improvements that we can expect are as followed:
- Eliminating the confusion about who is servicing the student loan by making all communication standard. The Department of Education will brand this communication. This will eliminate the differences that now occur among the current servicers and borrowers will now better understand who is servicing their loans.
- Create a single web portal so that the borrower can find information, make payments and apply for benefits all in the same place. No longer will the borrower need to know the name of their servicer.
- Make sure that customer service practices are reliable, high quality, consistent and uniform across all areas of customer service. Set a high standard for the customer service.
- Help borrowers stay current by trying to reduce or eliminate loan transfers or borrowers disruptions. Require better disclosures and improved consumer protections during the repayment process so that better consistency is found in the loan servicers.
- Increased accountability in customer service practices by establishing a new complaint system. This will provide a single spot for borrowers to go for help and questions.
- Creating a single platform for all Federal student loans.
If Student Aid Bill of Rights is able to achieve their goals it will provide additional rights and protection for student loan borrows and the taxpayers. The single branding of communication means that the loan servicers will no longer use their logos and it should help to alleviate some of the confusion. In the next of few months, we should hear more details about this new system. So far, the guidelines seem like the federal government is going in the right direction and making communication clearer for borrowers.
Remember, the best policy is always to stay current with your loans and not to default. If you are struggling then there are ways to stay current through the various student loan repayment options offered for federal loans. These rights only apply to federal loans and not private student loans.
EFC PLUS will keep you informed as more information becomes available. We are hoping for a better outcome on the student loan improvement. The Federal College Scorecard was promoted as a consumer tool to help families make a better college financial decision. In our opinion it was fair at best.