Student Aid Bill of Rights To Help Ensure Affordable Loan Repayment, 13473-13478 [2015-05933]

Download as PDF Vol. 80 Friday, No. 49 March 13, 2015 Part III The President tkelley on DSK3SPTVN1PROD with O1 Memorandum of March 10, 2015—Student Aid Bill of Rights To Help Ensure Affordable Loan Repayment VerDate Sep<11>2014 21:58 Mar 12, 2015 Jkt 235001 PO 00000 Frm 00001 Fmt 4717 Sfmt 4717 E:\FR\FM\13MRO1.SGM 13MRO1 tkelley on DSK3SPTVN1PROD with O1 VerDate Sep<11>2014 21:58 Mar 12, 2015 Jkt 235001 PO 00000 Frm 00002 Fmt 4717 Sfmt 4717 E:\FR\FM\13MRO1.SGM 13MRO1 13475 Presidential Documents Federal Register Vol. 80, No. 49 Friday, March 13, 2015 Title 3— Memorandum of March 10, 2015 The President 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. 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. 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. tkelley on DSK3SPTVN1PROD with O1 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 VerDate Sep<11>2014 21:58 Mar 12, 2015 Jkt 235001 PO 00000 Frm 00003 Fmt 4705 Sfmt 4790 E:\FR\FM\13MRO1.SGM 13MRO1 13476 Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Presidential Documents 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. 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. (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. (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. tkelley on DSK3SPTVN1PROD with O1 (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. (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. VerDate Sep<11>2014 21:58 Mar 12, 2015 Jkt 235001 PO 00000 Frm 00004 Fmt 4705 Sfmt 4790 E:\FR\FM\13MRO1.SGM 13MRO1 Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Presidential Documents 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. 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. (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. tkelley on DSK3SPTVN1PROD with O1 (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. (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 VerDate Sep<11>2014 21:58 Mar 12, 2015 Jkt 235001 PO 00000 Frm 00005 Fmt 4705 Sfmt 4790 E:\FR\FM\13MRO1.SGM 13MRO1 13478 Federal Register / Vol. 80, No. 49 / Friday, March 13, 2015 / Presidential Documents (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. (d) The Secretary of Education is hereby authorized and directed to publish this memorandum in the Federal Register. THE WHITE HOUSE, Washington, March 10, 2015 [FR Doc. 2015–05933 Filed 3–12–15;11:15 am] VerDate Sep<11>2014 21:58 Mar 12, 2015 Jkt 235001 PO 00000 Frm 00006 Fmt 4705 Sfmt 4790 E:\FR\FM\13MRO1.SGM 13MRO1 OB#1.EPS</GPH> tkelley on DSK3SPTVN1PROD with O1 Billing code 4000–01

Agencies

[Federal Register Volume 80, Number 49 (Friday, March 13, 2015)]
[Presidential Documents]
[Pages 13473-13478]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-05933]



[[Page 13473]]

Vol. 80

Friday,

No. 49

March 13, 2015

Part III





The President





-----------------------------------------------------------------------



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.

                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. 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.

                    (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. 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.

                    (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.
                    (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. 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.
                    (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. 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.

                    (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.
                    (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.
                    (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

[[Page 13478]]

                    (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.

(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