5 Things Every Latina Needs to Know About Obama’s New ‘Student Aid Bill of Rights’
So you did the right thing: You went to school, took out loans to fund your education, and graduated.
Congrats, chica! However, if you’re like most college grads, you’re now in a massive amount of debt and considering selling the canas that have begun to spring out of your cabeza for rent and loan money. Oof, we hear ya girl, and so does the federal government.
With the nationwide total student loan debt hovering at, oh, say about $1.2 trillion (yes, with a “t”)— or about $30,000 per student on average—the federal government has taken note.
which is essentially a complaint system for student loans designed to help students who have borrowed for their education to set up affordable ways to repay their loans without going broke.
As it has been laid out so far, the “Student Bill of Rights” is intended to help borrowers by requiring the companies that service student loans to be more upfront with borrowers regarding how, when, and to whom they are expected to issue payment. Or put simply:
The middlemen handling loan repayment—you know, like Nelnet—have to give borrowers a heads up when they become delinquent on payments.
Loan servicers also have to let borrowers know when their loans are transferred from one servicer to another so that they can, ya know, issue payment to the right people and places.
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If and when payment is transferred from one servicer to another, companies have to ensure that payments are applied first to loans with the highest interest rates unless borrowers instruct the companies not to do so.
Loan-issuing companies have to work with borrowers who are behind on payments to ensure that they are not charged excessive fees, because those fees add up!
The federal government will create website where borrowers can keep track of multiple loans and hopefully avoid becoming financially delinquent in the first place.
Not a bad start, but what if borrowers go bankrupt? Pues, as it stands now, with very few exceptions, borrowers cannot wipe their student debt slate clean if and when they file for bankruptcy. However, that’s something the federal government is trying to remedy. During his big announcement, President Obama urged administration officials to study whether changes to bankruptcy laws would be needed. Two days later, thirteen senators seconded the Prez’s sentiments when they introduced a bill dubbed the Fairness for Struggling Students Act of 2015, which will treat student loans issued by private banks the same as other types of private unsecured debt in bankruptcy proceedings.
Now before you go running to file for bankruptcy, you should know that if this long-shot bill becomes law, only a small chunk of student loans will be eligible for the bankruptcy treatment. Specifically, only loans issued by private banks—which is approximately 10% of all student loans—will be eligible for discharge in bankruptcy. The other 90%, those issued by the government, will remain untouchable. Sorry, chicas!
So, there you go. Suffice it to say these bills will not excuse you from having to pay your, well, your student loan bills, but they are intended to make student loan repayment a bit more manageable. At least, that’s the hope. What do you think? Do you think the “Student Aid Bill of Rights” and Fairness for Struggling Students Act will be effective? Sound off below or Tweet us at @dinero_futuro.
For more information about how student loan repayment, visit: https://studentaid.ed.gov/repay-loans/understand/servicers
For more information about President Obama’s “Student Aid Bill of Rights”, visit: https://www.whitehouse.gov/issues/education/higher-education/ensuring-that-student-loans-are-affordable