Last week President Obama announced a series of executive actions that he dubbed a “Student Aid Bill of Rights.”
The initiative is partially an exercise in damage control. It follows a series of lawsuits and scandals involving the Department of Education (DOE). The government agency has become the target of growing anger for protection of predatory student loan collection agencies, its bailout of the for-profit career college chain Corinthian and its overall profit-taking from student loans.
Obama’s initiative, in the form of a memorandum directed to the DOE, calls for:
- a new web site where all federal loans will be visible by July 2016
- requiring loan servicers to notify debtors when their loans are transferred or payments are late
- instructing loan servicers to apply prepayments to loans with the highest interest rate
- a “state-of-the-art” complaint system.