Student loan debt is weighing on retirement savings.
And it’s hitting multiple generations — not only are millennials drowning in college debt, their parents signed on to help their kids with student loans, while some older workers are still paying off their own loans years later.
The lure of a college education cannot be denied, especially when one considers the statistics on what that diploma is worth. The White House pointed out in a recent blog post that “bachelor’s degree recipients [earn] $1 million more in their lifetime and associate’s degree recipients [earn] $360,000 more, compared to their high school counterparts.”
Still, it’s tough to amass thousands of dollars in debt with no clear path toward repayment.
Toward that end, the Council of Economic Advisers pointed to new actions being taken by the White House to further help “the more than 40 million Americans with student loan debt understand their repayment options and access high-quality customer service, strong consumer protections, and targeted support to repay their student debt successfully.”
Here’s a look at 5 of those actions.
1. Increasing the goal for PAYE-type plan enrollment.
The Pay As You Earn (PAYE) program and other income-driven repayment plans are getting a boost, with the administration’s new goal to enroll two million more borrowers in plans like PAYE by this time next year.
Among the actions being taken to achieve this goal are improvements in loan servicing and customer service, better tools and resources, targeted outreach to borrowers, and partnerships with key external organizations under the Student Debt Challenge.
2. Launching StudentLoans.gov/Repay.
Student loan repayment options are complex, and it can be tough to figure out the best options available.
So the U.S. Digital Service and the Department of Education’s Office of Federal Student Aid have launched StudentLoans.gov/Repay to help drive students to their best repayment option in five steps or less.
“Built mobile-first, and using human-centered design,” the White House said, the website “was designed to make repayment information as easy to understand as possible.”
3. Creating stronger consumer protections through new standards for student loan servicing.
The Department of Education and Department of the Treasury, with input from the Consumer Financial Protection Bureau (CFPB), came up with three areas to boost student loan borrower rights and protections:
1. Providing accurate and actionable information about account features, borrower protections, and loan terms.
2. Establishing expectations for minimum requirements for communication and services provided by student loan servicers, including adequate and timely customer service.
3. Holding loan servicers accountable for fixing errors, being responsive to borrowers, and resolving problems by ensuring that borrowers, federal and state agencies, and regulators and law enforcement officials have access to appropriate channels of recourse when violations of federal or state consumer financial laws occur.
4. Providing better loan disclosure information.
The CFPB is developing a student loan payback playbook that would provide student loan servicing disclosures and provide borrowers personalized information to better understand their repayment options and find a monthly payment they can afford.
Currently the agency is seeking comment on the playbook, which will be finalized by the Department of Education with the CFPB’s input.
5. Improving student loan counseling.
The Department of Education is working to improve the timing and content of current loan counseling efforts, including entrance and exit counseling, to help students make better borrowing decisions, increase college completion, promote successful loan repayment, and reduce delinquencies and defaults.
The Department is also working on a loan counseling experiment to evaluate various counseling tools and techniques that go beyond statutorily required entrance and exit counseling.
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