URBAN AGENDA – Student Loan Debt: A $ 90 Billion Crisis We Cannot Ignore
The student debt crisis is real. Without it being their fault, a alarming number of student borrowers find themselves victims of unscrupulous lenders simply because they have gone to colleges and trade schools in search of better employment opportunities, a good standard of living and financial security. In New York City, student loan debt is a $ 90 billion crisis. Over the past year, the controversy has taken on countless bizarre twists and turns: billionaires haphazardly paying off people’s student loans, while at the same time student debt scams are on the rise and public programs loan cancellation falters.
On January 30, my organization, the Community Service Society, will be hosting a round table on the crisis, New York’s response, and what other policymakers, advocates and other stakeholders can do to hold loan officers accountable to help the state’s 2.4 million student borrowers – to both those who are already seriously in debt and those who are on the precipice. The event is free and open to the public.
New York and half a dozen other states have recently taken some very promising steps to tackle the crisis head-on. As part of the 2019 budget, New York adopted the Student Loans Service Act, 2019, which included licensing measures for service providers and establishing a Borrower Bill of Rights. The law was enacted to meet a real need: Since 2012, New Yorkers have filed more than 4,300 complaints against their student loan officers. In addition, Attorney General Letitia James’s office negotiated a $ 9 million settlement with New Jersey-based ACS Education Services known as Conduent Education Services for guiding 55,000 distressed student loan borrowers to temporary breaks in monthly payments instead of directing them to affordable repayment programs income-based. His office recently filed another complaint against one of the country’s largest student loan managers for unscrupulous practices.
Victims of lenders and deceivers range from young people in early adulthood to surprising numbers of borrowers over 50 years, according to the Government Accountability Office (GAO). The GAO also noted that older borrowers who defaulted on their loans decades ago have faced cuts to their Social Security to repay them. Three-quarters had taken out loans for their own education and owed less than $ 10,000 when their Social Security benefits were “cleared” initially.
Women of color hit hardest by student debt
Women are the largest group mired in student debt. They collectively hold $ 929 billion in student loans, an amount that accounts for nearly a third of all student loan debt in the United States according to the American Association of University Women (AAUW). Partly because of the gender pay gap, women take longer – and struggle more – to repay their loans. The debt burden then delays their home purchases, reduces their retirement savings and discourages them from starting small businesses, says AAUW.
Women with a bachelor’s degree face a cumulative median debt of $ 21,619; men face $ 18,880. But the problem is even worse for women of color: AAUW’s analysis found that black female graduates faced a median debt load of $ 30,366.
Student debt is a growing national crisis, fueled by changes in federal policy
As New York works to turn the tide, changes in federal policy mean the situation for student borrowers is only getting worse. For years, state attorneys general have worked side-by-side with the US Treasury Department and the Consumer Financial Protection Bureau to push the federal government to help troubled student loan borrowers, but that no longer happens. And under the leadership of Education Secretary Betsy DeVos, the Trump administration has unleashed the powerful student loan industry to flout the rights of borrowers by roll back protections piece by piece and simply ignoring the victims swindled by student loan officers. DeVos plans to step up its relentless campaign to roll back oversight of predatory student loan companies, with plans to adopt new regulation which further reduce loan forgiveness for students who claim to have been defrauded by loan officers. The regulations will also prohibit borrowers from asking state courts to act to cancel their loans. This new scheme will cost student borrowers billions more in debt repayment.
So where are we now? Because the federal government has abdicated its responsibility to control the loan services industry and protect consumers, New York must step in with a unified response that combines regulatory and enforcement actions with direct services that help those already in the face. to overwhelming debt to find a path to better financial health and a brighter future. That’s why I’m urging state lawmakers to fully fund the Consumer Student Debt Assistance Program (EDCAP) which helps borrowers protect themselves from unscrupulous loan officers, scammers and predatory lenders. . At our forum on January 30, we’ll explore the issues causing this crisis and ways to help borrowers fight back. We hope you will join us. “
David R. Jones, Esq., Is President and CEO of the Community Service Society of New York (CSS), the primary voice on behalf of low-income New Yorkers for more than 170 years. The opinions expressed in this column are solely those of the author. The Urban Agenda is available on the CSS website: www.cssny.org.