Last week, the President announced that he would be creating a “Student Aid Bill of Rights” through a Presidential Memorandum (similar to an Executive Order). The Bill of Rights contains some pretty great items. Here are the highlights:
- A new-and-improved complaint and feedback system for federal student loan borrowers, allowing them to file a complaint and monitor progress towards a resolution.
- Higher customer service standards and greater oversight of federal loan servicing companies to help borrowers avoid default and stay in good standing.
- A new-and-improved system for borrowers applying for income-driven repayment plans, such as IBR.
- Proposed changes to statutory and regulatory structures that may make it easier for borrowers to defend and dispute federal student loans.
- Proposed changes to bankruptcy laws to make it easier for student loans to be discharged in bankruptcy.
- Higher standards and greater oversight of federal student loan debt collectors to minimize situations where third-party debt collection agencies violate federal law by misleading borrowers about their rights and options.
First, I’m just going to come right out and say it: this is awesome, at least conceptually. Those of us in the student loan advocacy field have been calling for many of these changes and improvements for years, and this means that complaints about student loan servicing and collection are being heard at the highest levels of government. This is huge, and, if implemented, these reforms will have real, tangible, meaningful impacts on millions of student loan borrowers.
So, what’s the catch? Well, as is often the case with government, these are not instant or guaranteed reforms. For example, that new-and-improved complaint and feedback system? It isn’t going to be available until July 2016, at the earliest. And I can tell you from experience that new programs and systems, even when implemented, often take months or years to function as they are intended. Other provisions of the memorandum, such as higher standards for servicing and debt collection companies, and a streamlined income-driven repayment application system, first require that “reports” on these programs be submitted in late 2015, before any such changes are even put into place. So don’t hold your breath, because those reforms aren’t happening for quite some time. Still other provisions, particularly changes to regulations and laws surrounding student loan defenses and bankruptcy discharge, may require actual changes to federal laws and regulations, which would require Congressional involvement. We know how well Congress has been functioning lately.
Bottom line? This is pretty great (it really is) and I am thrilled to see that the President of the United States seems to “get it” in terms of major changes we need to see in student loan law. But (and there’s always a “but”), given the glacially slow timeline, and the fact that we don’t know who will even be in the White House (or what Congress will look like) by the time many of these programs are supposed to be implemented, I think that it’s far too soon to celebrate. Furthermore, even if every single one of these changes are implemented, we’ll still have lots of work to do to really fix this absurdly broken student loan system. This is a step, and an important one, but we have our work cut out for us.