Student Loan Borrowers Drowning in Debt Need Bold Solutions From Lawmakers
This post originally appeared on www.genprogress.org
By Melissa Haggerty | December 21, 2018
At a young age I was sold the idea that going to college would lead to financial security and upward economic mobility. What I was not told was that greedy private banks would be preying on people like me: a low-income, first-generation student, desperate to get ahead in life. A year and a half out of college, I am now one of the 44 million borrowers strapped with student loan debt, barely getting by, and looking for solutions from lawmakers.
As a young adult, I had few people around that understood how to finance a college education, so I had to figure it all out on my own. I tried all the well-known avenues of funding. I applied for financial aid through FAFSA, but was denied. My mother and step-father’s earnings rendering me ineligible for federal grants. It mattered little that they were unable to financially contribute to my education, or that they held massive amounts of personal debt.
I received one scholarship from my school, but that barely chipped away at tuition. In the end, I was offered minimal government loans, and no grants.
Between $60,000 in tuition, $14,000 in required on-campus housing, and $300 textbooks, costs piled up. Facing a mountain of expenses, I accepted the maximum allowable amount of federal student loans offered, and had no choice but to turn to the private market to cover the remaining costs at my school.
I researched a variety of private student loan options, eventually settling on a loan from Discover Financial Services. My financial situation didn’t allow me to take a loan out on my own, so my grandmother was added as a co-signer.
I worked throughout my time as a college student, sometimes up to 30 hours a week, all while making monthly student loan payments. It was never enough. The rapidly accruing interest made it impossible to make substantial progress towards paying down my student loan debt.
Not long after graduating from college, I’m already drowning in tens of thousands of dollars in debt, with 21 percent made up of accrued interest alone. Looking back, I don’t regret choosing to go to college in search of a better future, but I do regret taking out loans from a predatory private lender. I did my research before signing with them, but buried under all the glowing articles on their student loan plans were the pieces detailing their long history of shady and unregulated lending practices.
Three years ago, Discover was forced to pay $18.5 million to consumers for what the Consumer Financial Protection Bureau described as “illegal private student loan servicing practices.” Other student loan servicers, like Navient, have also been charged with similar accusations. Just a few weeks ago, the AP reported on a secret Department of Education audit that revealed Navient’s practices of pushing borrowers struggling with debt into higher-cost repayment plans.
At a time when greedy student loan servicers should be facing fierce oversight, the Secretary of Education, Betsy DeVos, has been found to be encouraging governors to veto protections for student borrowers, and rolling back protections for defrauded student loan borrowers. The government has also made it nearly impossible for student borrowers to file for bankruptcy. The few solutions to the student debt crisis that are often discussed, like refinancing, are not enough and don’t account for all the people affected by a broken system, like my grandmother, who is feeling the effects of an unregulated and destabilizing student loan system.
In cities across Illinois, borrowers are putting 10 percent or more of their paychecks towards paying down student loan debt. The consequences of this means financial stability will continue to be out of reach for young people like me unless bold policies are implemented that make college more affordable for future students, and provide meaningful relief to borrowers like me. In Illinois, borrowers now have a Student Loan Bill of Rights, which provides basic consumer protections to defend them against bad practices by student loan companies. But we need to go further. Incoming policymakers should hold greedy student loan lenders accountable for their deceptive practices, and consider debt forgiveness programs for current borrowers. Borrowers should also be allowed to file for bankruptcy. Saddled with tens of thousands of student loans, filing for bankruptcy would be a welcome relief.
My student debt problem isn’t just my personal problem, it’s a problem faced by more than 44 million Americans that collectively owe more than $1.5 trillion in debt. It’s a crisis that is impacting borrowers, families, and entire communities looking to build financially stable lives. It’s time our policymakers take these challenges seriously, and offer meaningful solutions to help borrowers get ahead.
Melissa Haggerty lives in Chicago and is a Loyola University Chicago alumna.
Higher Ed, Not Debt is a project of Generation Progress.