Helping Struggling Federal Student Loan Borrowers Manage Their Debt, 33843-33845 [2014-13961]

Agencies

• Executive Office of the President

[Federal Register Volume 79, Number 113 (Thursday, June 12, 2014)]
[Presidential Documents]
[Pages 33843-33845]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-13961]




                        Presidential Documents 



Federal Register / Vol. 79, No. 113 / Thursday, June 12, 2014 / 
Presidential Documents

[[Page 33843]]


                Memorandum of June 9, 2014

                
Helping Struggling Federal Student Loan Borrowers 
                Manage Their Debt

                Memorandum for the Secretary of the Treasury[, and] the 
                Secretary of Education

                A college education is the single most important 
                investment that Americans can make in their futures. 
                College remains a good investment, resulting in higher 
                earnings and a lower risk of unemployment. 
                Unfortunately, for many low- and middle-income 
                families, college is slipping out of reach. Over the 
                past three decades, the average tuition at a public 
                four-year college has more than tripled, while a 
                typical family's income has increased only modestly. 
                More students than ever are relying on loans to pay for 
                college. Today, 71 percent of those earning a 
                bachelor's degree graduate with debt, which averages 
                $29,400. While most students are able to repay their 
                loans, many feel burdened by debt, especially as they 
                seek to start a family, buy a home, launch a business, 
                or save for retirement.

                Over the past several years, my Administration has 
                worked to ensure that college remains affordable and 
                student debt is manageable, including through raising 
                the maximum Pell Grant award by nearly $1,000, creating 
                the American Opportunity Tax Credit, and expanding 
                access to student loan repayment plans, where monthly 
                obligations are calibrated to a borrower's income and 
                debt. These income-driven repayment plans, like my Pay 
                As You Earn plan, which caps a Federal student loan 
                borrower's payments at 10 percent of income, can be an 
                effective tool to help individuals manage their debt, 
                and pursue their careers while avoiding consequences of 
                defaulting on a Federal student loan, such as a damaged 
                credit rating, a tax refund offset, or garnished wages.

                While my Administration has made significant strides in 
                expanding repayment options available to borrowers and 
                building awareness of income-driven repayment plans, 
                more needs to be done. Currently, not all student 
                borrowers of Federal Direct Loans can cap their monthly 
                loan payments at 10 percent of income, and too many 
                struggling borrowers are still unaware of the options 
                available to them to help responsibly manage their 
                debt.

                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. Expanding the President's Pay As You Earn 
                Plan to More Federal Direct Loan Borrowers. Within 1 
                year after the date of this memorandum, the Secretary 
                of Education shall propose regulations that will allow 
                additional students who borrowed Federal Direct Loans 
                to cap their Federal student loan payments at 10 
                percent of their income. The Secretary shall seek to 
                target this option to those borrowers who would 
                otherwise struggle to repay their loans. The Secretary 
                shall issue final regulations in a timely fashion after 
                considering all public comments, as appropriate, with 
                the goal of making the repayment option available to 
                borrowers by December 31, 2015.

                Sec. 2.  Improving Communication Strategies to Help 
                Vulnerable Borrowers. By December 31, 2014, the 
                Secretary of Education shall develop, evaluate, and 
                implement new targeted strategies to reach borrowers 
                who may be struggling to repay their Federal student 
                loans to ensure that they have the information they 
                need to select the best repayment option and avoid

[[Page 33844]]

                future default. In addition to focusing on borrowers 
                who have fallen behind on their loan payments, the 
                Secretary's effort shall focus on borrowers who have 
                left college without completing their education, 
                borrowers who have missed their first loan payment, and 
                borrowers (especially those with low balances) who have 
                defaulted on their loans to help them rehabilitate 
                their loans with income-based monthly payments. The 
                Secretary of Education shall incorporate data analytics 
                into the communications efforts and evaluate these new 
                strategies to identify areas for improvement and build 
                on successful practices.

                Sec. 3. Encouraging Support and Awareness of Repayment 
                Options for Borrowers During Tax Filing Season. By 
                September 30, 2014, the Secretary of the Treasury and 
                the Secretary of Education shall invite private-sector 
                entities to enter into partnerships to better educate 
                borrowers about income-based repayment plans during the 
                tax filing season in 2015. Building off of prior work, 
                the Secretaries shall further develop effective ways to 
                inform borrowers about their repayment options during 
                the tax filing season in 2015, as well as through 
                personalized financial management tools.

                Sec. 4. Promoting Stronger Collaboration to Ensure That 
                Students and Their Families Have the Information They 
                Need to Make Informed Borrowing Decisions. By September 
                30, 2014, the Secretary of Education, in consultation 
                with the Secretary of the Treasury, shall develop a 
                pilot project to test the effectiveness of loan 
                counseling resources, including the Department of 
                Education's Financial Awareness Counseling Tool. The 
                Secretary of Education shall convene higher education 
                experts and student-debt researchers to identify ways 
                to evaluate and strengthen loan counseling for Federal 
                student loan borrowers. Additionally, the Secretaries 
                shall collaborate with organizations representing 
                students, teachers, nurses, social workers, 
                entrepreneurs, and business owners, among others, to 
                help borrowers represented by these organizations learn 
                more about the repayment options that are available to 
                them in financing their investment in higher education 
                and managing their debt, and to provide more 
                comparative, customized resources to those borrowers 
                when possible.

                Sec. 5. 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

(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.

[[Page 33845]]

                (d) The Secretary of Education is hereby authorized and 
                directed to publish this memorandum in the Federal 
                Register.
                
                
                    (Presidential Sig.)

                THE WHITE HOUSE,

                    Washington, June 9, 2014

[FR Doc. 2014-13961
Filed 6-11-14; 11:15 am]
Billing code 4000-01