The federal government has given and
taken away key protections to consumers with student loans. Changes
in department regulations and deals with the legislature will leave
some borrowers cheering, and others shaking their heads.
Tuition Reimbursement Cards
The good news starts with current college students. On October 27,
2015, the Department of Education
proposed
new rules that would protect students from overdraft fees and
other costs when trying to access their student loans.
Right now, many schools automatically deposit tuition
reimbursement funds into debit or pre-paid cards, created and
maintained by banks. When students overdraw their accounts, they can
face up to a $37 overdraft fee, as well as burdensome penalties if
the account stays negative.
The new regulation would cut back on fees associated with using
campus cards, including ATM fees and transaction fees. In addition,
colleges would have to provide students with a neutral list of
options to receive tuition refunds. The student's preexisting bank
account has to be first on the list, and the default option.
Education Undersecretary Ted Mitchell told the Washington Post:
“The regulations will help protect
students from unreasonable account fees, safeguard taxpayer dollars,
provide transparency.”
REPAYE Loan Repayment Plans
Paying back your student loans may have just gotten easier too.
The Department of Education has
expanded
a student loan repayment plan called, Pay as You Earn (PAYE), to
include all loans made directly by the government. The revised plan,
called REPAYE, caps participants' monthly student loan bill at 10
percent of their income. After 20 years of payments (25 years for
graduate degrees), any remaining balance is forgiven.
Auto-Dialers, Cell Phones, and Student Loans
Now for the bad news. Part of a tentative budget deal between the
Obama Administration and the legislature makes it easier for student
loan debt collectors to harass consumers who are past due. The deal
authorized the use of auto-dialers to borrowers' cell phones.
As of June, 2015,
$111.4
billion in federal student loans were in default. That's 6.9
million borrowers behind on their student loan payments. Under the
new deal, those borrowers will be left vulnerable to abusive debt
collection practices banned elsewhere in the industry.
The federal government has drastically changed protections for
millions of Americans facing student loan debt. It has given
protection from fees and provided a way out, but it has also allowed
collections agencies to torment borrowers. All in the hopes of
bringing a little more money into the federal budget.
Dani K. Liblang is a consumer
protection attorney at The Liblang Law Firm, P.C. She helps
people behind on their student loans end creditor harassment. If you
know someone facing overwhelming student loans, contact
The Liblang Law Firm, P.C., today for a free consultation.
