NEW YORK (MainStreet) — The Obama administration's Student Aid Bill of Rights looks for ways to redress borrower grievances, as though that will drive reform. But in attempting to simplify the complaint process, things may become more complicated.

Borrowers can currently file complaints with several agencies, including the Consumer Financial Protection Bureau (CFPB), the Department of Veterans Affairs, and the Department of Defense. There's also the Federal Trade Commission (FTC), which pre-dates the CFPB by almost 100 years. On student loans, the FTC focuses on deceptive practices including false claims by debt relief companies, telemarketers and credit repair organizations. There isn't a single destination for complaints and an alphabet soup of regulators deployed for higher ed will channel financial services, where many banks are regulated by the Fed, the OCC and the FDIC.

The White House also wants ED to share complaints with other agencies, also through a central portal, but it's not clear who would become the final arbiter when it comes to resolving them.

"The CFPB does have a complaint process, but it does not take complaints on issues that are strictly within the Department of Education's jurisdiction," said Deanne Loonin, an attorney and director of the National Consumer Law Center's Student Loan Assistance Project. "We think that while they are building this new system, they should immediately start using the existing CFPB system and it may be more efficient to combine resources. We need more details about what ED is planning."

Spokespersons for ED and CFPB could not be reached for comment.

The Obama Student Aid Bill of Rights doesn't fix problems around debt collection or debt collectors. Student groups want the Department of Education to take this on. In the meantime, debt collection lives in the Wild West, with ED paying private collection agencies to go after people ED loaned money to who are, in effect, ED’s customers.

The White House wants to make it easier to discharge student loans through bankruptcy as well, and these solutions wouldn’t be limited to private loans. There's a lot of heavy lifting to be done—such as amending the 2005 Bankruptcy Act. It's not clear what remedy the executive branch would involve and end around Congress.

"We don't know exactly what they mean because the statement on this is so vague," said Loonin said of the loan discharge piece in the Student Aid Bill of Rights. "But note that it is not restricted to private loans. To make [private] student loans dischargeable as they were before the [2005] bankruptcy law would require new legislation, but there are other things the Department can do.”

Loonin said ED should make sure that the contractors it hires to service and collect loans, such as ECMC Group, would not be able to use a “scorched earth litigation policy." NCLC and student groups are concerned that mandatory arbitration clauses will force students give up their right to sue.

Giving students a blow on bankruptcy protection has gained support outside higher ed--even among bankruptcy attorneys.

"We strongly support language to restore bankruptcy protection for private student loans, as was the case before passage of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act," said Ed Boltz, president of the National Association of Consumer Bankruptcy Attorneys in a letter to Iowa Democrat Tom Harkin just before he left the U.S. Senate last year. "When private student loan borrowers face unexpected life, they are allowed very little margin for error and often end up with unmanageable student loan debt that may be their own or they may have co-signed for a family member.

Unlike federal loans, he continued, "most private student loans do not offer options such as loan deferment, income-based repayment plans, consolidation, or loan forgiveness.” Private student loan borrowers who have endured financial hardship face a lifetime of debt with little or no chance of relief."

--Written by John Sandman for MainStreet