Recent reports suggest that President
Barack Obama signed a presidential memorandum recently asking the federal
agencies to change the way in which American students pay back their student
loans. Amidst the series of steps that the administration took to promote
college access and affordability among students, this move was the latest among
them. Moreover, this relief comes during a crucial time when student loan debt
surpassed $1.3 trillion and the average graduate is leaving school with around
$30,000 in student loans.
Affordability is a factor that was
always in question as most of the students borrow loans beyond their
affordability and this is the reason why they strive hard to get out of debt.
This is why Obama highlighted the importance of affordability through this new
plan which he unveiled at Georgia Institute of Technology, a school which
usually ranks as the best in education. According to what Obama believes, every
borrower has the right to afford a repayment plan; every borrower has the right
to quality customer care service, fair treatment and reliable information.
The student Aid Bill of Rights – What is it?
This new presidential memorandum is
named as the Student Aid Bill of Rights and it directs the US Department of
Education to introduce a new website by 2016, July to give student loan
borrowers an easy way of filing complaints and offering feedback about the
federal student loan lenders, collection agencies, the servicers and even their
schools. This website portal is supposed to assist the department to respond to
the complaints of the students promptly.
Following Osama’s plan, Democrats propose relief of student loans through bankruptcy
Thirteen Democrats in the Senate acted
on the suggestion when they introduced a bill names the Fairness of Struggling
Students Act of 2015 which will treat student loans that are issued by private
banks in a similar manner to other types of private unsecured debt in
bankruptcy proceedings. At the present moment, it is almost impossible to
eliminate students through personal bankruptcy, it is only sometimes allowed in
rare situations. Thanks to the change in federal bankruptcy code in 2005 that
protected private loans from being wiped off through bankruptcy. This bill that
was introduced sought to reverse the 2005 changes so that the student loan
borrowers could once again eliminate their debt through bankruptcy.
Studies reveal that too many Americans
are carrying student loan debt which is almost equivalent to mortgage debt and
this is forcing them to postpone certain major life decisions like purchasing a
home or getting married and starting a family. A Democrat, Senator Dick Durbin
said that they can’t sit with their hands folded while the student loan debt
keeps ticking away to glory. Even still,
the CFPB or the Consumer Financial Protection Bureau shows that the student
loan debt is at $1.2 trillion, which is even more than credit card and auto
loan balances.
Hence, if you’re a student who has been
struggling with student loan debt, you can wait for the new rule to come into
effect so that you can borrow according to your affordability and even
discharge your debts through bankruptcy.