President Obama tackles student loans

Student Loan Debt Reaches $1.3 Trillion, President Obama Expands Repayment Options

The White House recently unveiled a new website that specifically caters to educational or student loans payments. The effort is part of a series of initiatives put forth to improve the way the government collects these fees.

According to reports, government agencies are now working to provide 43 million Americans, who have $1.3 trillion in student debt, a more transparent website with information regarding the terms of their loans. It will also include account features and consumer protections.

Education Secretary John B. King Jr. acknowledged that costs are rising too fast, and there are so many Americans struggling to pay their student loans. He also said that the administration is working on a plan to ensure borrowers get quality customer service, strong consumer protections, and the support they need for them to successfully pay off their debts.

President Barack Obama and his administration have given Americans more options in repaying their student loans to avoid expanding income-driven plans. Income-driven repayment plans are known as the monthly payments equated to a percentage of one’s earnings.

The Department of Education has also been making direct outreach such as marketing campaigns that have led to higher enrollment. They also vowed to ensure that borrowers could file their complaints and get a timely response.

However, it has been found that the number of people with student loans remains high. At the end of March 2016, it was reported that 7.9 million people have not made a payment for at least nine months. Compared with the data as of March 2015, the number nearly had an 8 percent increase in the number of individuals who have not paid their debt.

More than half of these borrowers have loans from the old bank-based federal lending program. It was also shown that the number of borrowers, who have attained new loans but are falling behind on payments, is increasing quickly.

Some people have evaded their loans for the second time, and many Democratic lawmakers, as well as advocacy groups, are questioning whether the student loan servicers are doing enough to keep their borrowers up-to-date. These servicers are the middlemen who collect and apply payments on the government’s behalf. They are being paid millions of dollars by the federal government to keep people from evading their debts.

Researchers at the Government Accountability Office (GAO) found that when servicers reach out to delinquent borrowers, the information they give is most often inconsistent.

Consumer Financial Protection Bureau (CFPB) Director Richard Cordray said that the GAO finding tells them that “millions of borrowers may be failing to receive critical information about repayment options or are encountering communication breakdowns when they try to enroll.” Cordray added that people must be mindful of the “very real challenges” that people are facing regarding student loan debt.

CFPB is also doing their part about the matter as they have released their own Payback Playbook, which is a guide to help borrowers determine the best option for their repayment plans. The playbook is available in hard copy and will come with the borrowers’ monthly bills. It could also be sent via email whenever they log into their student loan accounts.

It was also noted that people who have fallen the furthest behind in paying their obligations are those who have not graduated and those unable to get employment.

The website and the other efforts to make repayment of student loans easier come a year after President Barack Obama signed the presidential memorandum called the Student Aid Bill of Rights. It directs federal agencies to overhaul how Americans repay their debts.

[Photo by Chip Somodevilla/Getty Images]

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