America is facing a student debt crisis.

Nationally, education borrowing has tipped the $1.5 trillion mark, putting it ahead of every debt category except mortgages.

Jody Harris

The national student debt crisis is hitting Maine hard. Mainers hold more than $6 billion in education debt. Our state ranks among the highest average debt load in the nation, with an average debt total of more than $33,000 per borrower. And while student debt is often discussed as a problem for millennials, no one is spared: Data from 2017 shows that roughly 20,000 Mainers over 60 years old are carrying student debt — a 46 percent increase since 2012.

Escalating college debt and rising rates of student loan defaults threaten to derail the benefits of higher education for Maine’s families and our economy. Money that normally would be spent at local businesses or to support household needs is tied up in loan payments and interest ― resulting in a loss of jobs, decreased spending, and reduced economic security for families.

Most college-going students expect to have to borrow to get their degrees. But the private financial companies that handle student loans on behalf of the federal government often make it harder, not easier, for Mainers to pay back what they borrowed.

How did we get here?

The answer is a lack of accountability in the student loan industry. Unlike servicers for credit cards and business loans, student loan servicers operate with little to no oversight. In that environment, unscrupulous, deceptive, and outright predatory practices become simply another way to boost profit margins.

While student loan servicers receive taxpayer dollars to manage federally guaranteed education debt, they act like they are accountable to no one — not borrowers, not elected officials, not regulators, and not everyday Americans.

The Consumer Finance Protection Bureau has compiled evidence that student loan servicers such as Navient, FedLoan Servicing and Nelnet have:

• Steered borrowers into forbearance, even when they had a right to enroll in repayment plans that would have lowered monthly payments;

• Obscured information borrowers needed to maintain lower payments, causing payments to spike by hundreds of dollars or more;

• Allocated partial payments in a way that maximizes fees; and

• Provided misinformation on billing statements, inflating the amount owed.

Mainers are struggling as a result of student loan servicers’ predation.

Polling by Lake Research Partners revealed that one-third of Maine student borrowers said servicing companies failed to tell them about income-based repayment plans for which they were eligible, while roughly 40 percent said problems with servicers caused a decrease of their credit score. Meanwhile, one-third said problems with student loan servicers led to new fees or higher interest rates, while 28 percent said they resulted in default.

Meanwhile, President Donald Trump’s administration has spent two years dismantling borrower protections. It got so bad that in 2018, the Consumer Finance Protection Bureau’s top student loan watchdog resigned in protest, saying that “the Bureau has abandoned the very consumers it is tasked by Congress with protecting” in order to “serve the wishes of the most powerful financial companies in America.”

That’s why Maine must act to protect borrowers in our state.

Luckily, Maine can protect borrowers even as the federal government walks away from them. The Maine Legislature is considering a bill that would enact a Student Loan Bill of Rights to protect Mainers with education debt and bring accountability to student loan servicers operating in our state.

The bill, LD 995, would make student loan servicing companies follow rules that protect borrowers, just like credit card and mortgage companies must do. For example, it would prohibit servicers from misapplying loan payments and would bar them from placing borrowers in default before enrolling them in an income-based repayment plan, if they are eligible.

It would also create a new “Student Loan Ombudsman” in state government to help Maine borrowers resolve problems with these companies, and to help Mainers understand their rights.

We may not be able to solve the student debt crisis in one year. But at the very least, lawmakers can vote “yes” on LD 995 to bring accountability to the student loan servicing industry and protect borrowers from predatory corporations.

Jody Harris is the associate director of the Maine Center for Economic Policy, and the author of MECEP’s recent policy brief, “Education debt in Maine: Predatory actors worsen borrowers’ woes as debt holds back Maine economy.”


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