2023-09-30 12:34:00
You can add Massachusetts Attorney General Andrea Campbell to the ranks of Bay State officials calling on Washington to be vigilant as student loan payments resume next week for tens of thousands of borrowers across the commonwealth.
On Friday, Campbell joined with 18 of her fellow state attorneys general, sending a letter to the White House and the U.S. Dept. of Education, to urge more protections for borrowers, and to raise additional concerns regarding loan servicers’ ability to meet increased demand.
“Federal loan borrowers will face a multitude of challenges as they begin making payments next month, including difficulty reaching their loan servicers,” Campbell said in a statement. “We are concerned that these challenges may prevent borrowers from accessing more affordable payments, including those available under the new SAVE repayment plan.”
The latter is a reference to an income-driven repayment plan now being offered to borrowers.
The action by Campbell and her colleagues comes just days following Democratic Massachusetts U.S. Sens. Elizabeth Warren and Ed Markey, joined by several of their colleagues, sent a letter to the top four loan servicers, seeking an update on the same topic.
Read More: Are student loan servicers ready for payments to resume? ‘Deeply worried’ Mass. lawmakers seek update
In that letter, Warren and Markey, along with Democratic U.S. Sens. Richard Blumenthal, of Connecticut, and Chris Van Hollen, of Maryland, said they were “deeply worried” regarding the companies’ readiness, MassLive previously reported.
More than 40 million borrowers nationwide, including nearly 1 million in the Bay State, are set to resume their payments following a more than three-year pandemic pause. Interest began accruing once more on those loans earlier this month.
A majority of loans were transferred to new servicers, who have say they’re doing what they can to ensure a smooth transition.
“Collectively we have done our best to project the inbound call volumes, staffing needs, back-office processing volumes and other components that will allow our borrowers to receive assistance and customer service they deserve despite of the unprecedented nature of the lengthy repayment pause,” EdFinancial Services CEO William Anthony “Tony” Hollin, one of those servicers, wrote in an Aug. 1 letter to Warren and Markey.
Campbell co-led the letter with Washington State Attorney General Bob Ferguson. They were joined by the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maryland, Michigan, Minnesota, Nevada, New York, Oregon, Pennsylvania, Vermont, Wisconsin, and the District of Columbia.
This week, Campbell and her colleagues called for more enthusiastic federal oversight, noting that “amidst a significant student debt crisis, which disproportionately affects low-income borrowers, women, and people of color, it is critical that the Biden Administration take further action to avoid harm to borrowers.”
Read More: A copy of the letter can be found here
While the SAVE program, along with the Public Service Loan Forgiveness Program for qualifying borrowers, are good first steps, Campbell and her colleagues cautioned that the likelihood of loan servicing issues appears high — particularly since the Education Department “appears to lack capacity to assist borrowers, oversee servicers, and enforce borrower protections during the return to repayment.”
The letter also comes amid the threat of a looming government shutdown, where the federal government’s oversight abilities are likely to be further constrained.
On Wednesday, U.S. Rep. Ayanna Pressley, D-7th District, called on the federal government to freeze repayments during a likely government shutdown, arguing that forcing borrowers to make payments would be “a recipe for disaster.”
“This Republican government shutdown stands to harm families across the nation, many who were just regaining their financial footing for the first time since the COVID-19 crisis,” Pressley said in a statement. “The [Biden] administration should absolutely pause student loan payments and interest accrual in light of these stark realities.”
In 2019-20, 56% of Massachusetts college graduates had some student debt, with an average of $33,457, according to data compiled by the Institute for College Access and Success. That was the eighth-highest tally nationwide.
About a third of those students, 31%, had non-federal debt, which often is costlier and carries fewer consumer protections than federal debt, the institute said in a statement.
The largest component was private student loans, offered by banks and private lenders. About 14% of the commonwealth’s students had such debt, with an average debt of $42,748, the institute’s data indicated.
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