One of the biggest pain points in American personal finance today involves student loans. There is over $1 trillion in outstanding student loan debt, and that number keeps growing every year. At the same time, the number of complaints about student loans has risen as well.
Borrowers are having a hard time navigating the complex bureaucracy that makes up the Federal and private student loan market. Students are taking out loans effortlessly and getting into trouble later, and are having trouble finding their options for help.
President Obama has laid out a roadmap for what he calls the Student Aid Bill of Rights. It’s a series of proposals intended to address the issues facing many borrowers. But what will it really do?
Improving the Complaint and Resolution Process
One of the biggest features of the initiative is to create a centralized complaint system that tracks and monitors complaints about student loan services. The end goal would be to combine all complaints received directly to the Department of a Education, along with complaints received directly by lenders and other parties.
The Department of a Education could then assign scores to student loan servicing companies, and assign more loan volume (and more business) to the companies that get the best scores.
This is a step in the right direction, because it can be hard for borrowers to get their grievances addressed timely and by the right organization. It may hopefully end stories like the consumer complaints about FedLoan Servicing and similar companies.