Two Ohioans tell their student debt stories
Posted on 10/03/18 by Victoria Jackson in Education & Training
Student loan debt is crushing Ohioans, who owe a combined $57 billion.
On average, Ohio undergraduate students who attend public universities and community colleges borrow $23,116 and $15,767, respectively. Students in Ohio struggle more with student debt than students nationally. Ohio has one of the highest rates of student debt per capita, and Ohio’s student loan default rate is higher than the national average. Rural, non-white, and low-income Ohioans struggle the most with paying their debt. Many Ohioans must choose between making loan payments and paying for other necessities like rent or food.
Catrina Otonoga and Elizabeth Cusma are just two of the millions struggling to pay back their student loans. They shared their stories about navigating the confusing landscape of loan servicing companies and being forced to choose between paying back their loans and paying for food. Catrina’s parents came to the United States hoping to provide their children with a better life. The price of upward mobility and a career should not be a lifetime of debt.
Student debt in Ohio is high because policymakers have failed to properly fund public higher education and need-based financial aid. Ohio is ranked 45thworst in college affordability because of the large percentage of family income required to pay for the cost of college. State policymakers can lower the cost of tuition by increasing funding for public higher education, and provide better financial aid that helps pay for living expenses, which otherwise might be paid for with loans.
Predatory loan servicers make the situation even worse for Ohio’s student borrowers. Loan servicers are the companies that are contracted by the federal government to manage and collect payments on a loan. The Consumer Financial Protection Bureau (CFPB) tracks complaints of predatory or abusive practices experienced by people with student debt. From March 5, 2012 to July 15, 2017, the CFPB fielded almost 1,500 student loan-related complaints from Ohio. Over half those complaints were for “dealing with your loan servicer or lender.”
The CFPB ramped up its defense of students under former Director Richard Cordray, now running for Ohio governor. The agency found that loan servicers engage in practices that harm borrowers like misapplying payments, charging improper late fees, and steering borrowers into costly forbearance or deferment instead of the more beneficial income-based repayment plans. Under new CFPB head Mick Mulvaney, the agency has been accused of abandoning these consumers.
There has been a systemic failure among loans servicers to appropriately help financially distressed borrowers. A Department of the Treasury study found that 70 percent of people who defaulted on their student loans qualified for income-based repayment with monthly payments as low as $0.
Unfortunately, Catrina and Elizabeth are not unique. There are far too many people with similar stories. Every Ohioan has a stake in fixing our higher education system. Some of society’s most important jobs – like teachers, EMTs, nurses, electricians and social workers - require degrees or certificates. Student debt harms the economy. When people are burdened with student debt, they put off buying houses or cars and they struggle to save for the future.
Ohio needs an equitable debt-free college program, better funding for public colleges, and a Borrower’s Bill of Rights that would protect borrowers by regulating loan servicers to end predatory practices.