More than 42 million Americans own a total of $1.3 trillion in student debt, surpassing the nation’s auto loan, mortgage and credit card debt. In Virginia, more than 50 percent of graduates have student loan debt that averages to about $27,000.
Chelsea Crooke, a recent graduate of Virginia Commonwealth University, is one of the many Virginians caught up in the confusion caused by student loan companies.
“I applied to student loans, not realizing how terrible they were,” said Crooke.
Crooke started out with a $12,000 loan she took out through Sallie Mae for one semester in 2011. That loan has now grown to about $25,000. She made payments while in school, but after graduation and before she found a job, her payments had significantly increased.
Crooke said she feels tricked. She believes that she was not made aware of the specifics of her student loan, such as payment increases. Even with a lack of information about her loans, she tried to find answers on her own, but she was continually redirected to different departments without luck.
Senate Bill 394, introduced by Sen. Janet Howell, D-Reston, would establish a student loan office to help Virginia borrowers understand their loan agreements. The agency, which will be found within the State Council of Higher Education for Virginia, would receive and resolve complaints from borrowers and assist in their education to understand their rights and responsibilities under the terms of their loan.
Student loans are complicated and require borrowers to sign a large stack of agreements. Crooke said the system needs to be made more simple and approachable to students. She believes loan companies are picking on uneducated students who are desperately seeking money for their college education.
Navient Corp., the nation’s largest student loan servicer, is facing several lawsuits alleging it harmed student loan borrowers in the repayment process. Navient has been accused of misallocating payments, steering struggling borrowers in the wrong direction and providing unclear information.
The highest delinquency rates come from low-income areas, such as in many parts of rural Virginia. As median income in a zip code increases, such as areas around Washington D.C., the delinquency rate decreases. Low-income borrowers are the most likely to default on their student loan repayments.
Howell’s bill is not the only legislation that addresses student debt. Del. Marcia Price, D-Newport News,introduced a very similar bill, House Bill 1138. To create more resources for students, Del. Marcus Simon, D-Falls Church, created a bill that would establish a Virginia Student Loan Authority board, and Sen. Jennifer Wexton, D-Fairfax, hopes to create the Virginia Student Loan Refinancing Authority.
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