While things seem to be heating up in Washington, D.C. over student loans, on the other side of the country, the Washington State Attorney General is demanding regulation over student loan lenders. Bob Ferguson, the Washington State Attorney General, penned a report detailing the issues of the industry as well as proposed safeguards for the 800,000 Washington student loan borrowers.
The report found that within Washington state, the number of borrowers over the age of 60 has increased by 35%, accounting for over $2.1 billion in student debt. These borrowers are not older citizens heading back to school, but instead parents and grandparents who were forced to co-sign loans for their son or daughter. These loans are not only overwhelming for the students but can disrupt retirement plans considerably.
Furthermore, the report also details the numerous issues that surround race and socioeconomic status. Although Hispanic students have roughly the same debt as their white counterparts, the risk of default on their loans is twice as likely. African American students on average will have $7,000 more in loans over their academic career than Caucasian or Hispanic students.
AG Ferguson pushed his Student Loan Bill of Rights as the answer; though it sadly died on the Washington Senate floor earlier this week. The bill would have allowed the state to license and regulate student loan servicers, and require student loan servicers to detail all options to repay a loan. Finally, it would have also established a student loan advocate group at the state level to respond to complaints and direct borrowers to resources.
As noted, the bill died on the state Senate floor. What does this mean for borrowers in Washington and the rest of the USA? Well, for one thing, it showcases that certain lawmakers are aware of the issues and are working hard to try to find a solution.
This is the new norm, state-level lawmakers who are making large strides to protect consumers in an already volatile student loan market. Ferguson is one of those lawmakers who see the issues that student loans cause. Evidence of this trend can be found in Pennsylvania where a case was filed by the PA AG against Navient.
For those who are not in Washington, it would be a good time to pay attention to the state level politics within your home state. This seems to be where the battle against aggressive student loan lenders will be waged, and although we are not sure what will happen, it is going to be the state level politicians, attorney generals and trustees that will determine the fate of lenders in one of the largest financial industries in the United States.