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Navigating Student Loans

July 2, 2018

One of the most vexing problems facing Virginia families is understanding student loan options.  The whole process is confusing and often opaque.  Navigating the system is difficult. And there are sharks in the water.

Over one million Virginia student loan borrowers owe over 30 billion dollars.  Student loan debt is the largest consumer debt outside of mortgages. There is increasing evidence that student loan debt is impeding economic growth, through reduced home buying, car purchases, consumer spending, and retirement savings.  Yet borrowers have had very little guidance or protections.

After three years of effort to help student loan borrowers -- success!   Governor Northam signed into law my bill creating an Office of Student Loan Ombudsman. SB 394 has several components that will help borrowers. 

*  It establishes the Office of Qualified Education Loan Ombudsman within the State Council of Higher Education in Virginia (SCHEV).

* The Office will receive, review, and attempt to resolve complaints from borrowers, and

*  Compile and analyze data on such complaints, and

* Assist borrowers in understanding their rights and responsibilities under the terms of qualified student loans, and

* Analyze and monitor the development of applicable laws and policies, and

* Disseminate information on its role in assisting borrowers with problems with loan servicer concerns, and

* Establish and maintain a qualified education loan borrower education course by Dec. 1, 2019.

Many people worked on this initiative and it is illustrative of the legislative process.  

Three years ago Delegate Marcus Simon and Anna Scholl of ProgressVirginia asked  me to work on solutions to the student loan debt crisis with them.  I readily agreed. And, with that, we embarked on a process that reveals both the positive and negative goings-on in Richmond.  

The first year Marcus and I introduced bills to set up a Student Loan Refinancing Authority as well as bills to establish the Office of Student Loan Ombudsman.  Not surprisingly, and probably wisely, both bills were turned into studies of the topic.

For a whole year the issue of student debt was investigated by the State Council of Higher Education in Virginia, the Department of the Treasury, and Virginia527.  They

developed several options for helping Virginia student loan borrowers.  

After extensive discussion and review of the impressive study, Marcus, Anna and I decided to go forward with two initiatives.  The first was a Bill of Rights and Responsibilities of Student Borrowers and the establishment of an Office of Student loan Ombudsman.   The second was to require student loan servicers to be licensed -more on this later. Meanwhile, Senator Jennifer Wexton picked up the student loan refinancing authority bill.

First the McAuliffe Administration and then the Northam Administration included the bills in their priority legislation packages. The bills easily passed the Senate but received opposition from the House Republicans. This year, finally, the Ombudsman bill passed with little difficulty. 

Not so fortunate was my bill SB 362 which required Student Loan Servicers to be licensed.   This bill easily passed the Senate and then failed in a House Committee on a party-line vote.  You need to only Google "student loan servicers" or "Navient" to see the underhanded and fraudulent practices engaged in by many servicers.  Just this past week, California joined other states in suing Navient for their illegal practices.  

The excuse given in the House Committee for not supporting the bill was that Education Secretary DeVos and the Trump Administration plan to preempt states from regulating the industry.  If you know me at all, you know that threat has only strengthened my resolve!

The Northam Administration, ProgressVirginia, Delegate Simon and I are determined to protect Virginia student borrowers from disreputable companies and practices.  Our students and their families deserve better.  

As always, I am honored to represent you in Richmond.  Please let me or my aide, Karol Straub, know if you need help with state government. We love solving problems!