Why we need a Student Loan Bill of Rights in Massachusetts
A new report by the Education Department’s Inspector General (IG), shows an alarming picture of the government systematically failing to oversee student loan servicing agencies. These agencies, such as Navient, Nelnet, and Pennsylvania Higher Education Assistance, are the middlemen of the student-loan industry. They are contracted by the government to service student loans, advise borrowers on the best repayment plans, and process their demands for deferment, forbearance, and forgiveness.
According to the IG’s report, the office responsible for overseeing these agencies — the Federal Student Aid — was fully aware that servicers were not following the guidelines, were systematically failing to inform borrowers about the appropriate repayment options, and did little to address problems or penalize their bad behaviors.
The Trump/DeVos administration has fiercely defended the servicers on several occasion making it clear that they are not in favor of regulation. They are also standing in the way of many states seeking to create their own consumer protection and oversight of these servicers. But states are not ready to back down. Here in Massachusetts, Senator Eric Lesser is leading efforts to establish a “Student Loan Bill of Rights” calling for a wide range of regulations, including the establishment of a student loan ombudsman and of a state-level licensing system for loan servicers.
We, at Hildreth Institute, fully support this initiative. We need to take action and protect student loan borrowers from the illegal and predatory practices by the student loan servicing industry by enacting our own Student Loan Bill of Rights! This is why we invite you all to come to the State House on March 6th at 10AM for the Student Borrowers’ Bill of Rights press conference. Come in numbers and show your support so that we can win our own bill of rights in Massachusetts! RSVP HERE!
Less State Funding for Higher Ed Means Heavier Debt Burden For Students
A new Boston Fed report urges policymakers to provide robust financial support for public higher education, highlighting the negative consequences of state disinvestment. Public colleges and universities have offset the loss of state funding by increasing tuition and decreasing instructional expenditures. This means that student have had to take on more debt for lower quality education. In effect, state aid decline has diminished students’ opportunities to pursue affordable quality degrees. When one of the central economic challenges in Massachusetts is the lack of skilled employees, it is imperative that we recommit to providing adequate funding to our public colleges and universities.
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Student Debt Burden is Getting Worse Every Year
This month, we saw several articles in the press, all pointing out the staggering student loan debt our nation is increasingly shouldering. Bloomberg reports that delinquencies continued to climb even as the unemployment rate fell below 4 percent, suggesting the strong U.S. job market hasn’t generated enough wage growth to help some people manage their outstanding obligations.
Business Insider, warns that young Americans (ages 18 to 29) currently have the highest debt exposure for their age bracket since 2007, the start of the global financial crisis, with debt exceeding $1 trillion.
Forbes reports that student loan debt is now the second highest consumer debt category — behind only mortgage debt — and higher than both credit cards and auto loans. Fortune added an important caveat that, although mortgage debt is still the largest, it increased by 3.2 percent while student loan debt grew by a staggering 102 percent.
Trump Not Interested in Student Debt Crisis, But There Is Hope in Democratic Presidential Candidates
One real threat that Trump failed to mention during his State of the Union is the record-breaking $1.5 trillion in outstanding student loan debt facing Americans. However, it is clear that higher education will be a top priority among 2020 democratic contenders. While free-tuition dominated the agenda in 2016, debt-free college seems the main focus of this election. While Elizabeth Warren, Kamala Harris, Cory Booker, and Kirsten Gillibrand all have signed on to legislation that could make college debt-free — the idea behind debt-free college is to go beyond tuition-free and address the other cost associated with college, which is often why students have to borrow in the first place.
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