Assistance program can protect student loan borrowers

Many college students rely on loans to help them attend college. There are more than 2.4 million student loan borrowers in New York, with a collective debt of approximately $90 billion.

For generations, students considered college debt the best investment they could make in their future, helping them secure a better job, fiscal stability and access the middle class. Taking out student loans has become a cultural norm; an unquestioned good decision that will surely pay off in the long run.

Tragically, for too many borrowers today, student debt hasn’t delivered the American dream. Instead, they’re living a financial nightmare, often created or compounded by the way loan servicers — the for-profit companies contracted by the federal government to collect on federal student loans — mislead and deceive borrowers.

Examples abound. Saddled with debt that can reach more than $100,000, many college graduates — and even more tragically, students who never graduated — have what amounts to a 30-year mortgage when they enter the workforce. If one thing goes wrong — an illness, the loss of a job, the arrival of a child — fiscal pressures can land student loan borrowers in default. Indeed, 10 percent of student loans are already in default, and some project that number could approach 30-40 percent in coming years.

Compounding this problem is a loan servicing industry that impedes rather than assists borrowers.

The expansive nature of this problem was confirmed last month when the U.S. Department of Education’s inspector general released a report on DOE oversight of the nine federal loan servicers.

Their findings: DOE is applying virtually no oversight over student loan servicers. In a recent five-year period, the inspector general found that DOE had only issued four financial penalties on loan servicers — for approximately $181,000 in fines — despite overseeing a system involving 44 million borrowers and $1.5 trillion in debt.

The result is an industry free to mislead student loan borrowers. Students are sometimes deceived into making decisions that unjustly extend the duration and amount of their debt, and are even denied access to government programs designed to provide those working in public service the ability to have their loan forgiven.

Education Secretary Betsy Devos and the Trump administration have chosen to empower the loan servicer industry rather than student borrowers. How can student borrowers fight back?

A huge first step would be for New York to fund a Student Loan Consumer Assistance Program.

This program would provide New York’s 2.4 million student loan borrowers with free, expert, unbiased advice on how to manage their student debt. Instead of relying on loan servicers for guidance when they lose their job or go back to school, borrowers could turn to SLCAP for honest information about the options available to them.

This week, the Assembly, thanks to the leadership of Assembly Banks Committee Chair Ken Zebrowski, D-new City, proposed $1 million to implement SLCAP. With the strong support of Senate Banks Committee Chair James Sanders, Dqueens, Assembly and Senate colleagues, and the governor, New York could soon set the standard for protecting student loan borrowers from fiscal disaster.

The average New York student borrower has $38,000 in loans. At our SUNY and CUNY campuses, we hear daily the anxiety of our fellow students as they approach graduation, wondering if they can keep up with their loan payments.

We urge the Legislature and Gov. Andrew Cuomo to give final approval to the proposed $1 million for the SLCAP so that borrowers can find honest, unbiased advice when they need somewhere to turn to avoid financial ruin.