Borrowers say student loan regulation is long overdue
DURHAM, North Carolina – A woman with two jobs and four college degrees said she could barely cover her monthly expenses, let alone her student loans.
As the daughter of a Navy veteran, Angelica Mitchell was able to attend college with the benefits of GI Bill, paying only the tuition for her final undergraduate semester. When she pursued her graduate studies, she qualified for several scholarships and held several part-time jobs along the way to a Masters of Public Administration and a Law degree. Even with all of this help, she ended up with $ 240,000 in student loan debt. This meant a bad credit rating, hampering his ability to get a job in the legal field or find good housing.
âI was just trying to get $ 1,100 for my bar exam fee so that I could pass the bar and get licensed as a lawyer,â she said. “But I was denied even that small amount of money, even having a job and just having an income anyway.”
According to the NC Coalition for Responsible Lending, more than 1.3 million North Carolinians owe a combined total of $ 48 billion in student loans. The average borrower owes $ 36,000. The debt crisis disproportionately affects people of color. Twenty percent of borrowers who live in communities of color use collection agencies, compared to 14% of borrowers in predominantly white neighborhoods.
Mitchell is currently renting a room from a friend and working two jobs as a teacher and doing online deliveries. That’s enough to cover her basic living expenses, but she doesn’t earn enough to make much headway on her loans, which have soared to $ 300,000 on interest.
âIt’s kind of a catch-22. Either I throw money away that doesn’t go towards the principal or I just let all the interest accumulate over time, âshe said. “So it’s a no-win situation with the position I currently occupy.”
Although North Carolina has consumer protection laws, it does not have a set of rules and regulations specific to the student loan industry. No state had student loan laws before 2015. A bipartisan group of state lawmakers want to change that.
Under the proposed Student Borrower Bill of Rights, all student loan managers would be subject to regulation by the State Banking Commissioner. Borrowers should be assessed for eligibility for income-tested repayment programs, loan forgiveness, or other relief programs. Any partial payments should be applied so as to minimize late fees and negative credit reports. In addition, the commissioner’s office would add an ombudsman who would be responsible for investigating any complaint.
Mitchell said none of his lenders have ever spoken to him about income-based repayment or other relief. For current student borrowers like her, she said some kind of loan forgiveness would be the best option. She said prospective students are more likely to benefit from any new regulations.
âWe wouldn’t give that amount of money to an 18-year-old for a house, so it doesn’t make sense to give them all these loans for a job that we don’t even know we will have or that they can. get. ,” she said.
The bill has not yet had a hearing, although the office of the bill’s sponsor, Rep. Rachel Hunt, of D-Mecklenburg County, said it was not submitted by the date. May 13 crossing limit. Similar legislation during the 2019-2020 session has never been heard.