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President Obama’s latest initiative to improve student lending was presented as part of a larger program - the Student Aid Bill of Rights – that brings together past and present proposals under one umbrella. In a More than 70% of Americans earning a bachelor’s degree graduate with debt, which averages USD 28 400 (about EUR 26 800) at public and non-profit colleges. Throughout his presidency, Obama has introduced major reforms to the student loan system. In 2010, the government took over the function of extending student loans, eliminating bank as “middlemen” liberating an estimated USD 68 billion (about EUR 62.3 billion) over 11 years. This money was used to increase the maximum amount of Pell Grants, which are now about USD 1 000 (EUR 920) higher. Another major reform, expected to become active in December 2015, caps borrowers’ loan payments at 10% of income (as opposed to 15%). The measures announced by Obama on 10 March were presented as an addition and a complement to these past ‘victories’; together, they reflect his vision of an affordable, inclusive, high-quality higher education system in America.
Critics, however, were quick to point out that the latest measures do not radically alter the student-lending landscape. A centralised complaint system and a unique information portal are indeed a step up for borrowers who currently have trouble keeping track of their loans and must jump a series of hoops before being able to log complaints. The present changes allow them to be, in essence, better informed consumers. However, they do not do much for borrowers facing unmanageable debt, the result of escalating college costs. Further, although Obama mentioned raising standards for student loan debt collectors, it remains to be seen just what this will mean in practice. As of now, student loan debt collection will remain in private hands, which some see as an inherent flaw in the system.
Presidential Memorandum The Chronicle of Higher Education