Making Student Loans More Affordable

"President Obama declared 2014 a year of action – vowing to use the power of his pen and phone to help ensure that hardworking Americans have the opportunity to succeed. And this week will be no different," the White House says in a press release.

"[On Monday], he will deliver remarks at the White House, announcing new executive actions to further lift the burden of crushing student loan debt, including a Presidential Memorandum that will allow an additional 5 million borrowers with federal student loans to cap their monthly payments at just 10 percent of their income. …

The President [on Monday] will also direct the Secretaries of Education and the Treasury to work together to do all they can to help borrowers manage their student loan debts. Specifically, the Departments will … 

Strengthen Incentives for Loan Contractors to Serve Students Well: … Today, the Department announced that it willrenegotiate its contracts with federal loan servicers to strengthen financial incentives to help borrowers repay their loans on time, lower payments for servicers when loans enter delinquency or default, and increase the value of borrowers’ customer satisfaction when allocating new loan volume.  These changes will improve the way that servicers are compensated to better ensure high-quality servicing for student loan borrowers. ...

Promote Stronger Collaborations to Improve Information for Students and Families: All student borrowers are required to receive loan counseling when they first borrow federal student loans and when they leave school, but little is known about the effectiveness of these programs.  Working with student debt researchers and student advocates, the Department of Education and the Department of Treasury will also develop and launch a pilot project to test the effectiveness of loan counseling resources, including the Department of Education’s Financial Awareness Counseling Tool.  The lessons learned will be considered for future actions by the Department and shared with outside partners like the National Association of Student Financial Aid Administrators to improve loan counseling activities at colleges and universities throughout the country.  

Additional Actions to Reduce Indebtedness and Promote College Affordability: Helping Students and Families Access Education Tax Benefits. In addition to helping borrowers manage their student loan debt, the Department of Education and the Department of Treasury will also work together to educate students, families, financial aid administrators, and tax preparers to ensure that all students and families understand what education tax benefits they are eligible for and receive the benefits for which they qualify.  In 2009, the President created the American Opportunity Tax Credit (AOTC), which provides up to $2,500 to help pay for each year of college. But the process of claiming education tax credits like the AOTC can be complex for many students, including for the 9 million students who receive Pell Grants, and hundreds of millions of dollars of education credits go unclaimed each year.  To help address this complexity, the Department of Treasury will release a fact sheet clarifying how Pell Grant recipients may claim the AOTC."

For more on the Obama Administration's efforts to reduce student loan debt, check out the complete White House Factsheet: Making Student Loans More Affordable. 

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