The Biden administration is introducing new consumer protection rules for borrowers
U.S. Secretary of Education Miguel Cardona speaks during the National Action Network National Convention on April 12, 2023 in New York.
Jeenah Moon | Reuters
The Biden administration announced a final plan Tuesday to improve its oversight of higher education institutions and strengthen consumer protections for student loan borrowers.
“We are raising the bar on accountability and ensuring that students who invest in higher education receive a solid return on that investment and have a greater chance at the American dream,” said U.S. Secretary of Education Miguel Cardona.
Some of the new rules aim to protect borrowers whose schools suddenly close, while other policies better inform students of their rights and reduce their chances of being unable to repay their school debt when they leave school.
More from Personal Finance:
“Cash stuffing” can mean foregoing the “easiest money” you can make
These credit cards had “increasingly remarkably” high interest rates
“Home affordability is incredibly difficult,” says the economist
Under the regulations, which take effect July 1, 2024, colleges receiving Title IV financial aid are required to provide “appropriate” financial aid counseling to their students, including information about the cost of attendance and the different types of aid available. They must also provide sufficient career services.
Families will also increasingly see standardized financial aid offerings that should make clearer what colleges spend and the differences between aid that must be repaid and aid that does not.
“It will reduce student loan debt by increasing awareness of the true cost of college,” said higher education expert Mark Kantrowitz.
Outstanding education debt in the US exceeds 1.7 trillion dollars, which burdens Americans more than credit card or car debt. The average loan balance at closing has tripled since the 1990s, from $10,000 to $30,000.
The Biden administration also plans to prevent colleges from withholding the transcripts of students who are behind on their bills.
“Eliminating the ability for colleges to withhold academic transcripts will allow more students to transfer colleges and apply for jobs,” Kantrowitz said.
Don’t miss these CNBC PRO stories:
