President Barack Obama signed the Student Aid Bill of Rights on Tuesday, calling on federal officials to increase borrowers’ access to federal loan information and help them avoid dishonest lenders.
The act proposes the creation of a website where students can file complaints about lenders, collection agencies and higher education institutions and broadens accesses to federal loan and payment information. And according to Minnesota higher education officials, the proposal is a step in the right direction for improving students’ experiences with financing college.
“We can’t allow higher education to become a luxury,” Obama said in a conference call Wednesday.
The plan, if it receives congressional approval, would require loan contractors to disclose more information on borrowers’ issues, like when they miss payment deadlines.
Betsy Talbot, a student consumer advocate with the Minnesota Office of Higher Education, said Obama’s plans are a good first step in making it harder for lenders to take advantage of students — which, she said, is happening more often than in the past.
“Companies are charging [students] to do things that they can do for free,” Talbot said. “And right now, the problem is that the current system can be a little confusing.”
Information on federal student loans is located on multiple different websites, Talbot said, further complicating access to loan information.
She said the president’s plan would channel all of that information into one central location, simplifying the process.
Arne Duncan, U.S. Secretary of Education, said he doesn’t think the proposal is a partisan issue, adding that congressional leaders will likely support the plan.
“There’s enthusiastic support across the board,” U.S. Under Secretary of Education Ted Mitchell said in the conference call. “We want to move as quickly as possible.”
Several bills have been proposed in the Minnesota state Legislature this session that would require higher education institutions to disclose more information on student loan debt.
The average borrower in Minnesota has about $24,000 in federal student loan debt.
James Kvaal, deputy director of the Domestic Policy Council, said the proposed website would allow students to track their complaints’ progress and allow the U.S. Department of Education to see what kinds of complaints are filed.
Joyce Serido, a University of Minnesota family social science professor who studies the effects of debt on well-being, said policymakers don’t always realize how little students know about loans and borrowing.
And large amounts of debt, she said, can be harmful to a person’s health.
“On every measure of well-being, those who are carrying debt are significantly lower,” Serido said.