Reducing the Burden of Student Loans
Nationwide, more than 44 million student loan borrowers collectively owe $1.48 trillion in student loan debt. Student loans provide an essential opportunity for people who may not otherwise be able to afford an education, but the high debt burden of New York’s graduates has the potential to ruin thousands of lives. For most of the last 20 years, costs associated with higher education – tuition, housing, and materials – have ballooned at more than twice the rate of inflation. At the same time, for-profit colleges target low-income students with sham promises of an education.
When the need for financial assistance is met with predatory lending practices and deceptive terms and incentives, we have the potential for a crisis that puts our state’s young people in its crosshairs.
Student loan debt is also a racial justice issue. Black students, with less access to accumulated wealth, leave college with an average debt load that is $7,400 more than their white counterparts. That gap widens as black graduates borrow more for graduate school, and struggle with higher interest accruals. Four years after graduation, the average debt load for black graduates is $53,000, more than twice that of white graduates. Black and Hispanic college graduates earn less than white college graduates by an average of approximately $10,000 per year. Loan default rates are higher for black and Hispanic graduates across educational institutions and degrees obtained. The highest loan default rates are among graduates of for-profit colleges.
With the recent resignation of the student loan ombudsman at the Center for the Consumer Financial Protection Bureau, Seth Frotman, it is even more important that state Attorneys General support the strengthening and enforcement of state laws that protect consumers. In his scathing letter of resignation, Mr. Frotman cited the Bureau’s intentional failure to enforce the laws and protection of bad actors.
As Public Advocate, I introduced legislation to reduce the victimization of veterans by for-profit colleges. I convened a task force that brought together students, veterans, elected officials, and academic leaders to shed light on the risks presented by for-profit colleges and examine how we can work across disciplines to ensure that students do not fall victim to their scams.
As Attorney General, I will:
Expose and prosecute for-profit colleges that make false promises to New Yorkers who seek higher education;
Investigate and take legal action against predatory lending practices that target communities of color;
Bring enforcement actions against deceptive practices by for-profit colleges and predatory lenders and debt servicers;
Strengthen oversight of student loan servicing;
Create an online complaint form and assessment tool to help incoming students balance future debt load against potential earnings;
Fight to reform the state law that prohibits deceptive practices so it is a more effective enforcement tool.
Below, I have outlined my strategy to protect New York’s incoming and outgoing graduates from abusive lending practices that threaten to derail a generation’s future.
Read my full strategy to protect New Yorkers from scam schools and abusive student loan companies: https://bit.ly/2wvxpcO