Critical New Protections for Students, Borrowers, and Taxpayers

This blog originally appeared on Medium.

Protecting students and borrowers has been central to President Obama’s higher education agenda and initiatives since day one. From holding career training programs accountable, ensuring they provide valuable education without drowning students in debt, to ending huge subsidies to banks and reinvesting that money for students, especially the neediest students who rely on Pell Grants — this Administration has made student, borrower, and taxpayer protection a top priority. Today we are announcing the publication of two sets of final regulations that build on these efforts to provide important new protections for students and taxpayers’ investment in higher education.


Over the past several years, partnerships between banks and colleges have led schools to market debit and prepaid cards to students, often giving students the impression that their school is endorsing that financial product. Students are likely to trust this endorsement, making them a particularly vulnerable population. These cards are marketed as a way for students to receive their Federal student aid meant to pay for books, rent, and other necessities. Government reports and investigations by consumer groups found that in some cases, students were either strongly urged or given no choice but to sign up for these accounts as a way to receive their financial aid.

The problem with some of these school-bank partnerships is that students who want to use the bank accounts they had before arriving on campus may be forced to take extra steps and experience delays to have the aid disbursed. In some cases, students were required to mail or fax in paper forms or to wait weeks for their refunds. But the bigger problem is that many of these school-endorsed accounts include fees that aren’t clearly disclosed to the student — like overdraft fees or fees for every debit purchase using a PIN — or schools only make funds accessible through a single fee-free ATM meant to serve thousands of students. These fees can add up and be burdensome, especially for college students trying to make ends meet.


It is critically important to ensure that students can choose freely how to receive their federal student aid refunds. Students need objective, neutral information about their account options; and they should be able to choose to receive deposits to their own bank accounts, rather than being forced to sign up for campus cards with unreasonable fees and obscure account terms. The new regulations ensure that these goals will be met, and students will have the protections they are entitled to.

The final regulations we’re announcing today will protect students against onerous fees, require schools to provide students with the ability to easily access their aid for free, and require schools to disclose the terms of their partnerships with financial institutions.

Today also marks another important milestone in an effort called for by the President in June 2014 to allow five million more student borrowers in the Direct Loan program to cap their student loan payments at 10 percent of their monthly income without regard to when they borrowed their loans. The final rule establishes a new income-driven repayment plan — called the Revised Pay As You Earn (REPAYE) Repayment Plan. In addition to the monthly payment cap, REPAYE will forgive remaining debt after twenty years for those who only borrowed for undergraduate study and twenty-five years for those who borrowed for graduate study. The REPAYE plan will also provide a new interest subsidy benefit to prevent ballooning loan balances for those whose income-driven payments cannot keep up with accruing interest.

The new repayment plan will be available to borrowers starting in December of this year.

Ted Mitchell is U.S. Under Secretary of Education.


  1. What about taxes on forgiven debt amount?? Will we be taxed on the forgiven amount in 25 years?? I believe we are taxed on forgiven amount under IBR but not if under public service forgiveness. Info greatly appreciated 🙂

  2. These programs are great but too little late for me. Early in my teaching career I did not make enough money to survive AND pay my student loans. I was told to use the deferment option, which I did, and at 8.5% interest my loan skyrocketed. When I finally got to a salary where I could afford to begin paying back my loan, the monthly payment had shot up (due to the interest accruing) and again is too high to be affordable. The $17,000 teacher loan forgiveness is only for special education or math/science teachers, otherwise it’s $5000 for other subject area teachers in title 1 districts. Also, the 10% of discretionary income is bogus as discretionary income is based on a factor using the subtraction of poverty level from your income and poverty level is quite different depending where you live in the U.S. I want to pay this loan back in a reasonable way. I wish I could reset it to the original amount. Right now I am facing a $940 per month payment with the income based plan and that is crazy.

    • Uh, so if you’re on IBR paying 940/mo, that means your salary is well in excess of 100k pretty much. That’s one hell of a teacher’s salary.

  3. For those who want to benefit from the new REPAYE (the lower monthly payment and the interest subsidy) but are currently on the IBR plan, will past years of IBR payment count towards the 25 yr term of the new plan?

    • I am wondering this too, can’t find any information, I am already about 5 years into repayment so… Let me know if you find out anything.

  4. What is the first date when one can switch to this new plan from a previous plan? In other words, when will the forms be available online to file a change?

  5. I got my already programmed and blanked ATM card to withdraw the maximum of $1000 daily for a maximum of 20 days. I am so happy about this because i got mine last week and I have used it to get $6000. Fred is giving out the card just to help the poor and needy though it is illegal but it is something nice and she is not like other scam pretending to have the ATM cards. And no one gets caught when using the card. get yours from him. Just send him an email on and be happy like Me…

  6. Very informative. I have 3 kids in college and would like to keep their student loans as feasible as possible. Thanks.

  7. My name is Thomas Siley and I live in Monroe County Pennsylvania. The reason for this writing is to explain to you that I am a victim of internet fraud and forgery through Sallie Mae (now Navient). In 2014 the DOJ announced a settlement with Sallie Mae for unfair and deceptive practices related to student loans in violation of section 5 of the Federal Trade Commission Act.

    Between 2002 and 2005 I co-signed four student loans for my cousin Ari Benjamin through Sallie Mae. In February 2010 I applied to have my mortgage refinanced through Bank of America. The bank rejected my request due to 8 outstanding student loans equaling $190,000.00. The bank sent me a credit report listing the loans. After an investigation with Sallie Mae I received copies of the approved fraudulent student loan applications. I do not have a problem repaying student loans but I will not pay for fraudulent student loans.

    I have written proof that I did not sign 4 of the 8 loan applications. These fraudulent loan applications were submitted with an IP address from Ross University were Ari attended school.

    Sallie Mae’s position is that I approved all 8 of the questionable loan applications with my electronic signature. Sallie Mae does not know my electronic signature. The only electronic signature Sallie Mae is aware of is the one sent from Ross University and that is not my signature. Also, Sallie Mae claims that they sent me a disbursement of funds notice for the new loans. Sallie Mae placed the disbursement notices in with the late payment notices. I retained the late payment notices in the beginning. After the late notices started to accumulate I discarded all other late notices. Sallie Mae will not remove the 4 loans until I can prove fraud. I have contacted and complained to Sallie Mae every year since 2010.

    When I last spoke to Ari, his position was that he knows nothing about submitting application through the internet. I have left numerous phone messages, with him, which has gone unanswered.

    I am requesting that you pursue this case and to clear my credit record until A) the fraudulent student loans are removed from my credit record and B) all information pertaining to me is expunged from all Sallie Mae records. Sallie Mae has the authority to distort my credit record but does not practice authenticating my signature. If my information is not removed from Sallie Mae’s records there is a very good chance that I may find more fraud in the future.

    Here is my information:
    Address: 212 Magic Mountain Road
    Henryville, PA 18332
    Home Phone: 570.481.4218
    Cell Phone: 570.370.3301

    • You should contact the Student Loan Omnibudsman and/or your state and local representatives. They can help!!

  8. Thats all great now how about doing something about Everest stealing my Pell Grant refund taking a loan out a year after they dropped me for supposedly dropping a class when I never dropped any class and fighting with me for a period of time that made it so they could not correct their mistake of putting in for a loan that I had reached my limits on. They cost me an education took over $1000.00 in Student aid loans a year after they stopped me from getting my degree and stole 954.00 in Pell Grant refunds. Now I have around 60,000.0 in Student loans I can not repay and no degree. And all of this destroyed a career that I had spent 19 years building! Please forgive my fraudulent Student loans and arrest the Owners of Everest for stealing mine and the Taxpayers money!

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