With the Explosion of Student Debt Across the Commonwealth, Virginia Must Take Action to Protect Borrowers
As the Legislative Session Begins, New Analysis of Student Loan Data Shows that more than One Million Virginians Now Owe Student Debt, Impacting Student Loan Borrowers of All Ages
JANUARY 16, 2019 | WASHINGTON, D.C. – Today, the Student Borrower Protection Center (SBPC), Virginia Poverty Law Center (VPLC), Virginia21, and Progress Virginia released new analysis demonstrating the scale of the student debt crisis in Virginia. This new analysis of government data shows that nearly 1-in-6 Virginians now owe student debt. For the first time, more than one million Virginians owe money on a student loan. This analysis makes a clear and compelling case for Virginia to take action to protect student loan borrowers in the Commonwealth from illegal student loan industry practices. Today’s release comes days after Governor Northam highlighted these issues in his State of the Commonwealth address, explaining that “[i]t is high time we began regulating the companies that service our student loans. While people may not be able to avoid taking on debt to get an education, they should be able to count on basic consumer protections.”
For the first time, more than one million Virginians owe student debt.
This new analysis looks at data made available by the U.S. Department of Education and the Federal Reserve Banks of New York and Philadelphia and shows the student debt crisis growing for borrowers across the Commonwealth, including:
- Virginia student loan borrowers now owe $39.5 billion in student debt;
- Over the last 10 years (2007-2017), student debt in Virginia has grown by 175 percent, outpacing the rate of growth in student debt nationally;
- Between 2016 and 2017, nearly $3 billion in student debt has been added to the backs of Virginia borrowers;
- More than 76,000 older borrowers across Virginia owe student debt. Nearly 10,000 of these borrowers are severely delinquent;
- 17 percent of borrowers living in rural Virginia are at least three payments behind on their student loans; and
- More than 1,800 Virginians have submitted complaints about their student loan companies.
“With the plight of student loan borrowers only getting worse, Virginia needs to take action,” said Seth Frotman, Executive Director of the Student Borrower Protection Center. “The federal government has walked away from this crisis, casting more than one million Virginians aside in the process. And with $3 billion added last year alone, student loan borrowers across Virginia cannot wait any longer for predatory student loan companies to be held accountable.”
“Over a million Virginia student loan borrowers are at the mercy of student loan servicers who can make or break their financial future,” said Jay Speer, Executive Director of Virginia Poverty Law Center. “Virginia needs to regulate these servicers especially since it has become clear that the federal government is abandoning borrowers.”
“Access to loans is crucial for students who want to pursue a postsecondary education but can’t afford to pay out of pocket,” said Jared Calfee, Executive Director of Virginia21. “But we must ensure that students are protected from predatory lending practices and that bad actors are held accountable.”
“We all want the opportunity to thrive. But for too many student loan borrowers, the debt they took on under the promise of future financial success is crushing their dreams,” said Anna Scholl, Executive Director of Progress Virginia. “With more Virginians than ever before struggling to survive the student debt crisis, it’s time for the General Assembly to act to pass the Borrowers’ Bill of Rights and protect Virginia’s one million student loan borrowers from the predatory servicers who are looking to profit off students, not help them succeed.”
Student loan borrowers across Virginia continue to suffer under the weight of mounting debt and face new hurdles from predatory companies. This analysis exposes the rising levels of unsustainable debt borne by older Americans and shows that Virginia borrowers of all ages continue to struggle. It also shines a spotlight on the ways in which the federal government continues to ignore evidence of the nation’s growing student debt crisis. Specifically, federal efforts to protect student loan borrowers have ceased, making it easier for bad actors to prey on borrowers.
As a new year begins, the SBPC, VPLC, Virginia21, and Progress Virginia are demanding accountability over companies at the center of a broken student loan system. This new analysis bolsters the case made by leaders across Virginia that the Commonwealth must take immediate action to demand justice for student loan borrowers in their communities. Senator Howell has introduced Senate Bill 1112 that would, for the first time, demand accountability from student loan companies doing business in Virginia by requiring student loan servicers to secure a license and be subject to state oversight. Delegates Simon and Price have introduced a similar bill in the House.
SBPC helping states fight for 44 million Americans with student debt
In the face of continuing systemic abuses across the student loan industry, state governments are taking action to expand protections for student loan borrowers and halt illegal practices by predatory companies. Last year, the Student Borrower Protection Center launched States for Student Borrower Protection, an initiative which highlights the student debt crisis in Virginia, and is designed to support the leaders in and out of government working to end this crisis through state level actions. Today’s release offers further evidence that state action is urgently needed.
This new analysis is part of an ongoing series of original research, projects, and campaigns by SBPC designed to help student loan borrowers by shedding light on the crisis and empower advocates.
About the Student Borrower Protection Center (SBPC):
The Student Borrower Protection Center (www.protectborrowers.org) is a nonprofit organization solely focused on alleviating the burden of student debt for millions of Americans. SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students. Led by the team of former federal regulators that directed oversight of the student loan market at the Consumer Financial Protection Bureau, SBPC exposes harmful and illegal practices in the student loan industry, drives impact litigation, advocates on behalf of student loan borrowers in Washington and in state capitals, and promotes progressive policy change. SBPC accomplishes these goals by partnering with leaders at all levels of government and throughout the nonprofit sector.
About Virginia Poverty Law Center (VPLC):
VirginiaPoverty Law Center (www.vplc.org)is a 501(c)3 non-profit and nonpartisan organization committed to leading and coordinating efforts to seek justice in civil legal matters for lower-income Virginians. For the better part of four decades, VPLC has consistently adhered to our mission: To provide leadership, support, training, public education and advocacy to address the civil legal needs of Virginia’s low-income population. This fight will not disappear in the near future, but by working with our partners we will ensure that the rights and services provided to the neediest among us will continue to be protected.
Virginia21 (www.virginia21.org) is a non-partisan non-profit organization that empowers college students and young Virginians to be engaged citizens and advocates for issues important to them and Virginia’s future. With chapters all around the Commonwealth and members in every legislative district, Virginia21 has engaged tens of thousands of young people in the political process since its founding in 2002, making it the most successful advocate for young voters in the nation.
About Progress Virginia:
Progress Virginia (www.progressva.org) is a multi-issue progressive advocacy organization that combines cutting edge online organizing and communications with rapid and hard-hitting earned media strategies. Year round, Progress Virginia will work to engage citizens from across the state around issues of immediate state or local concern.