No one wants to go into debt. However, for many, student loans are a necessary part of reaching educational goals.
According to estimates from the White House, more than 800,000 Washingtonians have federal student loan debt, and that number is higher still if private loans are included. Each of these individuals has their own story about the impact that these loans has had on their life, but for far too many, student loans are an enormous burden.
In a 2016 Consumer Reports survey of people with student loan debt, almost half said that - if they had it to do over again - they would accept less financial aid to pay for their school. They would cut costs, find other ways to pay for their education, or go to a less expensive school.
More than half the people in the Consumer Reports survey said they had problems making payments on student loans at least once. Navigating these challenges can be difficult. At the same time, there seems to be no shortage of people trying to take advantage of student loan borrowers.
To assist student loan borrowers in Washington, the Attorney General's Office has compiled a Student Loan Survival Guide. This guide provides information about student loans for students and their families. It provides tips and links to resources for all points in the process to help high school students thinking about attending college, former college students who aren’t able to keep up with their payments, and everyone in between.
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Student Loan Bill of Rights
Protect student loan borrowers by creating a dedicated ombuds and adopting standards for loan servicers.
In the past few years, the Washington State Attorney General’s has received more than 325 complaints from Washington consumers about student loan servicers. Complaints include a failure to provide information about free resources, a failure to notify the consumer when a loan is transferred to a different servicer, a failure to respond to requests for information, and misapplication or nonapplication of payments.
More than half of students who graduated from Washington’s colleges and universities in 2014 left with student loan debt. The average debt is more than $24,000.1 Borrowers frequently struggle to repay their debt and navigate the repayment process.
LEGISLATION (HB 1440)
In 2015, the Connecticut Legislature unanimously passed a Student Loan Bill
of Rights. California and the District of Columbia have since followed.
HB 1440 will create standards that serve as a baseline for servicer compliance in working with student borrowers, providing student borrowers with important guarantees. These guarantees include:
- The guarantee that requests for information will be responded to promptly, in writing, and a record of that communication will be kept;
- The guarantee that payments will be credited within one business day;
- The guarantee that the borrowers will be provided notice when a loan is transferred between servicers;
- The guarantee that fees assessed to the borrower from servicer error will be refunded.
HB 1440 will assist student loan borrowers by establishing a student loan ombuds to receive and resolve complaints, compile and analyze data, and provide outreach and education.
Student Loan Transparency Act
Provide students with regular statements reflecting the outstanding balance of their student loans and estimated monthly payments upon graduation. The purpose is to increase awareness of the long-term impact of student loans and reduce avoidable borrowing.
For many students, loans are necessary to reach their educational goals. Students often lack basic information about their student loans, including the amount of the loans and what their monthly payments are likely to be. According to the Brown Center on Education Policy at Brookings, “…about half of all first-year students in the U.S. seriously underestimate how much student debt they have, and less than one-third provide an accurate estimate within a reasonable margin of error.”
The majority of Washingtonians graduate from colleges and universities with debt—$24,000 on average. The average student loan balance rises with each new graduating class. This is a significant financial burden to carry when beginning a new career.
During the 2012-13 academic year Indiana University sent an annual loan statement to students. Combined with other financial literacy initiatives, undergraduate borrowing reduced by almost 16 percent over two years. Building on this success, the Indiana Legislature passed a bill requiring that all postsecondary institutions accessing state financial aid provide the following to each student annually
- An estimate of the students’ total education loans;
- An estimate of the total amount owed including interest;
- An estimate of the students’ expected monthly payment, including principal and interest; and
- The percentage of the federal borrowing limit the student has reached.
Recently, Wisconsin and Nebraska have followed Indiana’s lead and passed similar legislation.
LEGISLATION (SB 5022 / HB 1057)
Makes it easier for students to understand the long-term implications of their borrowing decisions. It requires colleges and other institutions of higher education to provide notices to students detailing their loan balances and estimated monthly payments at least annually and within 30 days of the disbursement of a loan.