New Federal Student Loan Rules to Benefit Students, Borrowers

The US Department of Education has unveiled new regulations that will protect college students and help borrowers.

The regulations announced on October 27, 2015, will prohibit unreasonable fees for students and allow borrowers to limit the amount of their payments to 10% of their income.

“These regulations will help make sure student loan debt is affordable for all borrowers,” wrote Secretary of Education Arne Duncan in a press release.

Some of the changes that will occur as a result of the new regulations include:

· Students will be able to choose how to receive their federal student aid refunds.

· Students will be given neutral, objective information about their financial aid disbursement options.

· Students will not have to pay excessive fees to access their federal student aid, including Pell grants.

· Students will not be forced into opening a specific account with their institution for their student aid refunds.

· Students will not be charged “excessive or confusing fees,” including overdraft fees and transaction-swipe fees, if a student uses an account with contractors who assist institutions in making direct payments of federal student aid.

The US Department of Education said it hopes that these new regulations will protect students by allowing them to have fee-free access to funds that will be used for food, housing, books, and supplies. The department also seeks to improve transparency with these new regulations.

In addition, the department’s proposed regulations to ease student loan debt burden have been made final. This means that 5 million more direct loan borrowers will be able to cap their monthly student loan payment amount at 10% of their annual income allocated per month.

Federal Family Education Loan (FFEL) holders will also identify more service members who would be eligible for a lower interest rate under the Servicemembers Civil Relief Act (SCRA) and automatically enroll them.