President Obama’s Down-to-the-Wire Loan Changes
Obama is putting his last months in office to good use for student loan borrowers.
By Kathryn Knight Randolph
May 06, 2016
President Obama has just months left in his presidency, but his administration is still working tirelessly to make changes to the student loan market. In the past few years he has instituted the Student Aid Bill of Rights and overhauled the Income-Based Repayment Plan. It has been his goal to make paying back loans easier, curbing default rates and providing greater transparency for borrowers before and during repayment.
On April 28, the administration announced further changes, according to Yahoo Finance. Some of these changes will affect borrowers now while others won’t go into effect until a later date.
Changes borrowers can expect now:
- Increase in income-based repayment enrollment.Yahoo Finance states that one in four borrowers are in default, and 70% of those borrowers could have actually qualified for an income-based repayment plan to help lower monthly payments. Given this, the White House wants to work on enrolling more borrowers for IBR.
- Better help choosing repayment plans. The U.S. Department of Education has released a new webpage to help find the perfect repayment plan. Borrowers simply have to answer five questions in order to find the plan that fits their needs. From there, the page provides a step-by-step guide for how individuals can sign up for their best repayment plan. Check out the new website here.
- Federal standards for lenders. In the past, there have been no real regulations for lenders. As a response, the administration has drafted guidelines for lenders to follow – and actions for borrowers to take in the event that those principles are being abused.
Yahoo Finance also outlines steps for the future as well. The Department of Education plans to push the Payback Playbook live soon, provide more accurate student loan debt figures as they relate to credit reports and a centralized loan servicing system that will streamline communication between lenders and borrowers. Dates for these particular releases have yet to be announced.
Borrowers looking for comprehensive student loan forgiveness will have to look elsewhere, unfortunately. While the term was thrown around during the throes of the recession, the push for student loan forgiveness to help boost the economy is all but dead. President Obama has made it easier, though, for borrowers to pay back their loans through income-based repayment and provided a way to forgive student loans once they have been paid for a set amount of years (10 or 20 for those that work in public service positions).
As President Obama continues to push final changes to the student loan market before his term is up, Fastweb will keep our readers posted.
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