Student Aid Bill of Rights To Help Ensure Affordable Loan Repayment

[Federal Register Volume 80, Number 49 (Friday, March 13, 2015)]

[Presidential Documents]

[Pages 13475-13478]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 2015-05933]

[[Page 13473]]

Vol. 80

Friday,

No. 49

March 13, 2015

Part III

The President

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Memorandum of March 10, 2015--Student Aid Bill of Rights To Help Ensure

Affordable Loan Repayment

Presidential Documents

Federal Register / Vol. 80 , No. 49 / Friday, March 13, 2015 /

Presidential Documents

___________________________________________________________________

Title 3--

The President

[[Page 13475]]

Memorandum of March 10, 2015

Student Aid Bill of Rights To Help Ensure

Affordable Loan Repayment

Memorandum for the Secretary of the Treasury[,] the

Secretary of Education[,] the Commissioner of Social

Security[,] the Director of the Consumer Financial

Protection Bureau[,] the Director of the Office of

Management and Budget[,] the Director of the Office of

Science and Technology Policy[, and] the Director of

the Domestic Policy Council

America thrived in the 20th century in large part

because we had the most educated workforce in the

world. Today, more than ever, Americans need knowledge

and skills to meet the demands of a growing global

economy. Since many students borrow to pay for

postsecondary education, it is imperative they be able

to manage their debt as they embark on their careers.

because we had the most educated workforce in the

world. Today, more than ever, Americans need knowledge

and skills to meet the demands of a growing global

economy. Since many students borrow to pay for

postsecondary education, it is imperative they be able

to manage their debt as they embark on their careers.

My Administration has taken historic action to ensure

that college remains affordable and student debt

remains manageable. We have eliminated tens of billions

of dollars in student loan subsidies paid to banks in

order to increase the maximum Pell grant by nearly

$1,000 and provide a path for borrowers to limit

payments on many student loans to 10 percent of income,

and we have worked with the Congress to enact the

American Opportunity Tax Credit, worth $10,000 over 4

years of college. We have promoted innovation and

competition to bring down college costs, increased

completion rates, and given consumers clear,

transparent information on college performance.

College remains an excellent investment, and student

loans enable many who could not otherwise do so to

access further education. However, there is more work

to do to help students repay their loans responsibly.

In 2013, college graduates owed an average of $28,400

in Federal and private loans. More than one in eight

Federal borrowers default on their loans within 3 years

of leaving school. My Administration has already put in

place significant protections that ensure borrowers

with credit cards and mortgages are treated fairly

3, college graduates owed an average of $28,400

in Federal and private loans. More than one in eight

Federal borrowers default on their loans within 3 years

of leaving school. My Administration has already put in

place significant protections that ensure borrowers

with credit cards and mortgages are treated fairly. We

can and should do much more to give students affordable

ways to meet their responsibilities and repay their

loans.

Now is the time for stronger protections for the more

than 40 million Americans with student loan debt. All

student loan borrowers should have access to an

efficient and responsive complaint and feedback system

that holds loan servicers accountable and promotes

transparency, the information and flexibility they need

to repay their loan responsibly and avoid default, and

protections to ensure that they will be treated fairly

even if they struggle to repay their loans.

Therefore, by the authority vested in me as President

by the Constitution and the laws of the United States

of America, I hereby direct the following:

Section 1. State-of-the-Art Complaint and Feedback

System.

s to ensure that they will be treated fairly

even if they struggle to repay their loans.

Therefore, by the authority vested in me as President

by the Constitution and the laws of the United States

of America, I hereby direct the following:

Section 1. State-of-the-Art Complaint and Feedback

System.

(a) Complaints and Feedback Regarding Federal

Financial Aid. By July 1, 2016, the Secretary of

Education shall develop and implement a simple process

for borrowers to file complaints regarding Federal

financial aid, including those pertaining to lenders,

loan servicers, private collection agencies, and

institutions of higher education. The process shall

allow people to file a complaint and monitor its

progress toward resolution. In addition, the Department

of Education will provide data from the complaint

system to other enforcement agencies that are

responsible for oversight of Federal

[[Page 13476]]

student loan lenders, loan servicers, private

collection agencies, and institutions of higher

education. By October 1, 2017, and annually thereafter,

the Department of Education shall publish a report

summarizing and analyzing the content in and resolution

of borrower complaints and feedback received through

the process

oan servicers, private

collection agencies, and institutions of higher

education. By October 1, 2017, and annually thereafter,

the Department of Education shall publish a report

summarizing and analyzing the content in and resolution

of borrower complaints and feedback received through

the process. By October 1, 2015, the Secretary of

Education shall report to the President, through the

Director of the Domestic Policy Council and the

Director of the Office of Management and Budget, on the

optimal way to address other student complaints

regarding institutions of higher education that

participate in Federal student financial aid programs.

(b) Coordination Among Other Enforcement Agencies.

By October 1, 2015, the Secretary of Education shall,

in consultation with the Director of the Consumer

Financial Protection Bureau, recommend to the

President, through the Director of the Domestic Policy

Council and the Director of the Office of Management

and Budget, a process for sharing information with

relevant enforcement agencies so that those enforcement

agencies may refer matters where there may be

violations of consumer protection law.

Sec. 2. Helping Borrowers Repay Their Loans and Avoid

Default.

nd the Director of the Office of Management

and Budget, a process for sharing information with

relevant enforcement agencies so that those enforcement

agencies may refer matters where there may be

violations of consumer protection law.

Sec. 2. Helping Borrowers Repay Their Loans and Avoid

Default.

(a) Higher Standards for Federal Direct Loan

Servicing. By January 1, 2016, the Secretary of

Education shall require all Federal Direct student loan

servicers to provide enhanced disclosures to borrowers

and strengthened consumer protections. These

disclosures and consumer protections shall be improved

throughout the loan repayment process, and shall

include disclosures to borrowers regarding loan

transfers from one servicer to another and

notifications when borrowers become delinquent or have

incomplete applications to change repayment plans. As

soon as practicable, the Secretary shall direct all

Federal Direct student loan servicers to apply

prepayments to loans with the highest interest rate to

ensure consistency across servicers, unless otherwise

instructed by borrowers.

ent or have

incomplete applications to change repayment plans. As

soon as practicable, the Secretary shall direct all

Federal Direct student loan servicers to apply

prepayments to loans with the highest interest rate to

ensure consistency across servicers, unless otherwise

instructed by borrowers.

(b) Regular Review of Student Loan Performance and

Borrower Trends. The Director of the Office of

Management and Budget and the Secretary of Education

shall convene quarterly an interagency task force

consisting of the Department of the Treasury,

Department of Education, Office of Management and

Budget, and Domestic Policy Council to monitor trends

in the student loan portfolio, budget costs, and

borrower assistance efforts. No later than August 1,

2015, the task force shall review recommendations for

the Department of Education from its members and the

Consumer Financial Protection Bureau on best practices

in performance-based contracting to better ensure that

servicers help borrowers responsibly make affordable

monthly payments on their student loans.

(c) Additional Protections for Student Loan

Borrowers

of Education from its members and the

Consumer Financial Protection Bureau on best practices

in performance-based contracting to better ensure that

servicers help borrowers responsibly make affordable

monthly payments on their student loans.

(c) Additional Protections for Student Loan

Borrowers. By October 1, 2015, the Secretary of

Education, in consultation with the Secretary of the

Treasury and the Director of the Consumer Financial

Protection Bureau, shall issue a report to the

President, through the Director of the Domestic Policy

Council and the Director of the Office of Management

and Budget, on (i) whether statutory or regulatory

changes are needed to current provisions that permit

the Secretary of Education to specify acts or omissions

at institutions of higher education that borrowers may

assert as a defense to repayment of a direct loan; and

(ii) after assessing the potential applicability of

consumer protections in the mortgage and credit card

markets to student loans, recommendations for statutory

or regulatory changes in this area, including, where

appropriate, strong servicing standards, flexible

repayment opportunities for all student loan borrowers,

and changes to bankruptcy laws.

consumer protections in the mortgage and credit card

markets to student loans, recommendations for statutory

or regulatory changes in this area, including, where

appropriate, strong servicing standards, flexible

repayment opportunities for all student loan borrowers,

and changes to bankruptcy laws.

(d) Higher Customer Service Standards in Income-

Driven Repayment Plans. By October 1, 2015, the

Secretary of Education and the Secretary of the

Treasury shall report to the President, through the

Director of the Domestic Policy Council and the

Director of the Office of Management and Budget, on the

feasibility of developing a system to give borrowers

the opportunity to authorize the Internal Revenue

Service to release income information for multiple

years for the purposes of automatically determining

monthly payments under income-driven repayment plans.

[[Page 13477]]

(e) Finding New and Better Ways to Communicate with

Student Loan Borrowers. By January 1, 2016, the

Secretary of Education shall report to the President,

through the Director of the Domestic Policy Council, on

the findings of a pilot program to test new methods for

communicating with borrowers who have Federal Direct

student loans on which they are at least 140 days

delinquent but which have not entered default

Secretary of Education shall report to the President,

through the Director of the Domestic Policy Council, on

the findings of a pilot program to test new methods for

communicating with borrowers who have Federal Direct

student loans on which they are at least 140 days

delinquent but which have not entered default. By

January 1, 2017, the Secretary shall also, in

consultation with the Director of the White House

Office of Science and Technology Policy, develop and

implement at least five behaviorally designed pilot

programs to identify the most effective ways to

communicate with borrowers to maximize successful

borrower repayment and help reduce delinquency and

default and report to the President, through the

Director of the Domestic Policy Council, on the status

and results of those pilot programs.

(f) Making it Easier for Federal Direct Student

Loan Borrowers to Repay Their Student Loans. As soon as

practicable, the Secretary of Education shall establish

a centralized point of access for all Federal student

loan borrowers in repayment, including a central

location for account information and payment processing

for all Federal student loan servicing, regardless of

the specific servicer.

Sec. 3. Fair Treatment for Struggling and Distressed

Borrowers.

centralized point of access for all Federal student

loan borrowers in repayment, including a central

location for account information and payment processing

for all Federal student loan servicing, regardless of

the specific servicer.

Sec. 3. Fair Treatment for Struggling and Distressed

Borrowers.

(a) Raising Standards for Student Loan Debt

Collectors. By July 1, 2015, the Secretary of Education

shall implement actions to ensure that the debt

collection process for defaulted Federal student loans

is fair, transparent, charges reasonable fees to

defaulted borrowers, and effectively assists borrowers

in meeting their obligations and returning to good

standing. By January 1, 2016, the Secretary of

Education shall publish a quarterly performance report

on the Department's private debt collection agency

contractors that includes the underlying data,

disaggregated by contractor.

(b) Providing Clarity on the Rights of Borrowers in

Bankruptcy. By July 1, 2015, the Secretary of Education

shall issue information highlighting factors the courts

have used in their determination of undue hardship, to

assist parties who must determine whether to contest an

undue hardship discharge in bankruptcy of a Federal

student loan.

rowers in

Bankruptcy. By July 1, 2015, the Secretary of Education

shall issue information highlighting factors the courts

have used in their determination of undue hardship, to

assist parties who must determine whether to contest an

undue hardship discharge in bankruptcy of a Federal

student loan.

(c) Protecting Social Security Benefits for

Borrowers with Disabilities. By July 1, 2015, the

Secretary of Education and the Director of the Office

of Management and Budget, in consultation with the

Commissioner of Social Security, shall develop a plan

to identify Federal student loan borrowers who receive

Social Security Disability Insurance (SSDI) and

determine which beneficiaries qualify for a total and

permanent disability discharge of their student loans

under the Higher Education Act of 1965. The plan shall

specify a process for the Secretary of Education to

stop collection on qualified borrowers in order to

ensure that SSDI benefits are not reduced to repay

student loans that are eligible for discharge. In

addition, the Secretary of Education and the Director

of the Office of Management and Budget, in consultation

with the Commissioner of Social Security, shall

identify the best way to communicate with other SSDI

recipients who hold student loans about their repayment

options, including income-driven plans, and assist them

in entering those plans.

ctor

of the Office of Management and Budget, in consultation

with the Commissioner of Social Security, shall

identify the best way to communicate with other SSDI

recipients who hold student loans about their repayment

options, including income-driven plans, and assist them

in entering those plans.

(d) Debt Collection Pilot Program. By July 1, 2016,

the Secretary of the Treasury, in consultation with the

Secretary of Education, shall report to the President,

through the Director of the Domestic Policy Council and

the Director of the Office of Management and Budget, on

the initial findings of an ongoing pilot program that

uses the Department of the Treasury's Bureau of the

Fiscal Service to collect on a sample of defaulted

Federal student loan debts to help determine how to

improve the collection process for defaulted Federal

student loans.

Sec. 4. General Provisions. (a) Nothing in this

memorandum shall be construed to impair or otherwise

affect:

(i) the authority granted by law to an agency, or

the head thereof; or

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(ii) the functions of the Director of the Office of

Management and Budget relating to budgetary,

administrative, or legislative proposals.

(b) This memorandum shall be implemented consistent with applicable law and

subject to the availability of appropriations.

(c) This memorandum is not intended to, and does not, create any right or

benefit, substantive or procedural, enforceable at law or in equity by any

party against the United States, its departments, agencies, or entities,

its officers, employees, or agents, or any other person.

is memorandum shall be implemented consistent with applicable law and

subject to the availability of appropriations.

(c) This memorandum is not intended to, and does not, create any right or

benefit, substantive or procedural, enforceable at law or in equity by any

party against the United States, its departments, agencies, or entities,

its officers, employees, or agents, or any other person.

(d) The Secretary of Education is hereby authorized and directed to publish

this memorandum in the Federal Register.

(Presidential Sig.)

THE WHITE HOUSE,

Washington, March 10, 2015

[FR Doc. 2015-05933

Filed 3-12-15;11:15 am]

Billing code 4000-01