To block loan servicers’ abuses, NC should pass the Student Borrowers’ Bill of Rights

A Durham resident has spent 10 years crossing t’s, dotting i’s, and taking occasional days off work because she “had loan stuff to do.” Now she is waiting on pins and needles to find out if her diligence was wasted or if this month her $115,000 in student debt will be officially forgiven.

This student borrower believes she has done everything required by the Public Service Loan Forgiveness (PSLF) program to have her loan forgiven. She worked in a public service field for 10 years, when she could have taken a higher paying job. She practically lived at Kinko’s for a week to submit her initial application, and over the years she has called her student loan servicer with questions, often multiple times in one day before feeling she has gotten a reliable answer.

But hundreds of thousands of applicants for the PSLF also thought they did everything required, and, heartbreakingly, only 2% got their loans forgiven. So, she’s holding her breath she gets the word.

Most of us think of the $1.7 trillion student debt crisis as a national problem with a federal policy solution. But North Carolina has a big slice of that crisis. We had the second largest increase in the country from 2008 to 2018, having tripled the amount owed in that time frame. Now more than 1.3 million North Carolinians have student loan debt totaling $48 billion. This debt weighs people down, holds families back from reaching middle-class security, and negates the benefits of a higher education for those who work so hard in pursuit of the American dream.

There is something states can do, something powerful. More than a dozen states have already passed a Student Borrower’s Bill of Rights, and North Carolina can join them this spring by passing House Bill 707, a bipartisan bill introduced by North Carolina Representatives Rachel Hunt, Mitchell Setzer and Jon Hardister.

The North Carolina Student Borrower’s Bill of Rights will license and regulate student loan servicers, so that North Carolinians can count on solid, responsible service. This would give our state regulators oversight over PHEAA, which manages the PSLF, and other servicers that have notoriously mishandled student loan accounts. Navient, for example, was sued by the CFPB for cheating borrowers out of their right to be placed into income-based repayment programs, adding $4 billion nationally over five years to the principal balances of borrowers who were steered to forbearance instead.

Student loan borrowers include so many of us, our family members, friends and colleagues. The most impacted are, of course, those who had to take on the most debt because they had no family wealth to help them through college – first generation college students, low-income families, communities of color, rural students. For these groups, the promise of college is tarnished by the painful load of debt many will carry for their lifetimes.

North Carolina will be a better place to live for everyone – families, students and small-business owners alike – when our state’s borrowers are protected from predatory student loan servicing practices that load people up with debt and make it prohibitively expensive to get an education.

These borrowers made an investment in their futures when they took out loans to pay for their education. North Carolina can take action to ensure that their investment in education does not end up being the thing that limits their futures. Our lawmakers should quickly pass the Student Borrowers’ Bill of Rights.

This story was originally published May 20, 2021 at 12:00 AM with the headline "To block loan servicers’ abuses, NC should pass the Student Borrowers’ Bill of Rights."