By Staff –
The Education Trust–New York has recently released a report, titled “Drowning in Debt,” which draws on data from the Federal Reserve Bank of New York that shows New York communities with an average income under $50,000 owe a cumulative $29.5 billion in student loan debt.
The organization has also identified several state budget proposals to help make college more affordable, and to protect borrowers from abusive lending practices.
“Against the urgent backdrop of the daunting and growing debt burden on lower-income families, New York should take advantage of the current state budget process to improve college access, affordability and success,” Ian Rosenblum, executive director of The Education Trust–New York, stated. “Proposals like the Assembly’s innovative Martin Luther King Jr. Scholarship Program, the student loan servicing bill included in the Executive Budget, and a range of proposed bipartisan investments would support programs that help students complete a degree, and safeguard their rights as borrowers.”
According to the report, between 2016 and 2017, the amount of student loan debt New Yorkers collectively owe increased from more than $86 billion to over $90 billion.
The problem was particularly acute in communities with average household income under $50,000, where the total inflation-adjusted debt burden has increased by 44 percent in just six years, and with average delinquency rates that far exceed that of wealthier communities.
The organization has identified the following state budget proposals to help address the issue, as per the report:
1) Make college more affordable for lower-income families by providing additional financial assistance for costs such as books, housing, food, and transportation. The Assembly 1-house budget proposes the establishment of a new Martin Luther King, Jr. Scholarship Program to address this unmet need. The Executive Budget and Assembly 1-house budget also include the DREAM Act, which would enable all students—regardless of immigration status—to participate in TAP and all other scholarship and loan programs.
2) Protect consumers from student loan abuses. The Executive Budget would establish a Student Loan Ombudsman at the Department of Financial Services (DFS) and enact legislation to protect borrowers from industry abuses in the student loan servicing industry.
3) Help students complete college and successfully enter the workforce. The delinquency gap between lower- and higher-income communities, in part, reflects the higher default rates faced by students who left college without completing a degree—leaving them with significant debt without the ability to earn a family-sustaining wage. Programs that address food insecurity and help low-income and other first-generation college students’ complete college, including the Higher Education Opportunity Program, can both reduce debt, and lead to a pathway to economic and workforce opportunity that makes financial security possible.
Visit https://newyork.edtrust.org/wp-content/uploads/sites/5/2018/03/Equity-Alert_Drowning-in-Debt.pdf to view the full report.