Before a crowd of soon-to-be debt-laden college students at the Georgia Institute of Technology Tuesday, President Barack Obama unveiled a new Student Aid Bill of Rights and announced a new presidential memorandum to help fix the nation's student loan system.
The bill of rights spotlights four points, each advancing on the idea that every student deserves not only an affordable education, but that they shouldn't have to struggle to achieve it. That means a fair and uncomplicated monthly loan repayment plan for graduates and more protection from bureaucratic burdens and mistreatment, Obama said.
"Higher education has never been more important, but it's also never been more expensive," he said to whistles and applause in the university's stadium. "We want to make this experience more affordable because you're not just investing in yourselves, you're investing in the nation."
Obama's announcement comes just after the fifth anniversary of the passing of his administration's student loan reform bill, which aimed to provide relief to some 40 million Americans who collectively possess outstanding student debt of around $1.3 trillion — more than both credit card or auto loan debts.
Inside the pavilion on a cloudy, 70-degree day, Obama outlined his set of proposed actions to buttress the Student Aid Bill of Rights, including a new website where students can access account and repayment information all in one place — historically a problem for those with multiple loans. A new central complaint website will also provide students with an outlet to air feedback and grievances on colleges, universities, federal loan lenders, and government-contracted service and collection agencies like Sallie Mae/Navient Corp., and request legal action if necessary.
Plans to streamline the collections process to stop borrowers from falling behind on payments requires these contractors to let students know when they're about to or have defaulted — a prospect that faces some 17 percent of borrowers. The Department of Education will also have to better inform students when their loans are transferred between companies, while the government also said it will work with experts to review both federal and bank-issued loans to see if and where more changes are needed.
The president hopes to start rolling out the first of these actions on July 1, and push through the rest before his before his eight years in the oval office ends in January 2017.
Obama's promised changes to education took shape early in his first term. But despite a raft of reforms which have attained varying levels of support and success — including increasing Pell grants, introducing tax credits for college, and a January 2015 proposal to make two years of community college free for responsible students — debt and defaults have continued to rise; a fact both POTUS and Georgia Tech students are keenly aware of.
"By the time I graduate I'll have $20,000 in loans," Chelsey Ashworth, 21, an international relations major at Georgia Tech, told VICE News. "That's a lot of money to pay back, especially if you're trying to start your life."
Nationwide, more than 70 percent of bachelor's degree students will graduate having accrued an average debt of $28,400.
Many of the actions outlined in president's speech Tuesday were planned improvements to his 2010 Student Loan Forgiveness initiative to reduce America's swelling debt burden. Just as the president's Affordable Healthcare Act assumed the eponymous nickname "Obamacare," his student loan forgiveness program, which was tucked into the Health Care and Education Reconciliation Act of 2010, also quickly snagged the president's own branding.
Through the so-called Obama Student Loan Forgiveness program, the government sought to take charge of loan administration and cut out the middleman. Instead of private banks issuing government-guaranteed loans, they would be disbursed directly by the government through Department of Education contractors, saving a projected $60 billion over a decade, the White House said at the time.
Based on a new range of income-based loan repayment options, more than a million students became eligible for capped monthly repayments at 10 percent of their disposable income. Those same students would have any remaining unpaid debt written off after 20 years under the new plan — or after just 10 if the borrower became a teacher, nurse, soldier, or other public servant.
How much did Obama's bill affect average students in the four years after it was signed? For those with existing private bank loans, the bottom line remained unchanged or payments actually increased with inflation. And under the program, only those with federal loans signed after July 1, 2014 qualified for better repayment terms, like unchanged interest rates for the life of the loan.
But in early June last year, shortly before the original plan was set to kick in, the president took executive action to extend his "Pay as You Earn" plan so that some 5 million more students who had already borrowed to finance their education could enjoy the same benefits. Enrolment in these types of loans has increased significantly, but still not to the number eligible or expected, partially due to convoluted or poorly executed administration processes.
"There is more work to do to help students repay their loans responsibly," Obama stated in his presidential memo. "All student loan borrowers should have access to an efficient and responsive complaint and feedback system that holds loan servicers accountable and promotes transparency."
For the growing number of student borrowers who have debts heftier than their yearly incomes or are forced to choose between paying rent or defaulting on loans, any move to relieve them of the debt squeeze was welcome. But, Republicans in Congress weren't happy with Obama going solo on the issue, and many opposed the measure saying it would be too costly for the government.
Congress eventually did agree to retroactively lessen interest rates for federal student loans, but at percentages that will now vary along with the market, and are not fixed as initially proposed.
So it's no coincidence the president chose to speak to students in Georgia, where Republicans currently occupy the governor's mansion, both the state's seats in the US Senate, and dominate the state assembly. It's from the right that Obama expects to encounter the most resistance to his latest round of student loan proposals, but even though his proposals don't need congressional legislation, he still hopes to get Republicans on board.
"We're going to be reaching out to them, trying to get them to see this is a good investment," he said before more than 9,500 students Tuesday.
While the president has failed to see eye-to-eye with Republicans on education spending, he has also faced increased criticism within his own party, recently squaring off with Democratic senators like Elizabeth Warren, who has slammed his administration for not doing enough to help struggling graduates pay off debt. Warren even introduced her own bill on loan refinancing, which was knocked down by Senate Republicans.
But although Obama called for partisanship to support his proposals Tuesday, he also made it clear that it's not Congress he seeks to woo with his ideas, but rather students like those at Georgia Tech. Some of those students told VICE News Tuesday they were worried for the future, but hopeful they can pay their loans back without defaulting. To them, the president's priorities made the grade.
"I liked his ideas to help us with financials because college is hard and paying for it is harder," said Teju Faminu, a computer engineering freshman with a "few thousand" in student debt. "The best part was he related to us — tried to put himself in our shoes. He knows how it is because he went through it."
Here are the four objectives the White House's new Student Aid Bill of Rights:
I. Every student deserves access to a quality, affordable education at a college that's cutting costs and increasing learning.
II. Every student should be able to access the resources needed to pay for college.
III. Every borrower has the right to an affordable repayment plan.
IV. And every borrower has the right to quality customer service, reliable information, and fair treatment, even if they struggle to repay their loans.
Follow Liz Fields on Twitter: @lianzifields