The Oregon Division of Financial Regulation has released the state’s first analysis of residents’ student loan debt, and recommendations for how the governor and Legislature could help lighten the burden for current and former college students.
The report was conducted following the passage of Senate Bill 485 in 2021. The law called for changes to loan service renewal, declared an emergency and required an annual report.
The first of those annual reports states that the U.S. Department of Education owns $1.48 trillion in debt, which is 84% of the total student loan market, and guarantees an additional $143 billion of Federal Family Education Loan Program and Perkins loans. Since 2007, the federal student loan portfolio has grown more than 300%.
About 44 million Americans currently have student loan balances, compared to 28 million in 2007.
In Oregon, the report found, about 552,000 residents are student loan borrowers, with an average debt of $37,900.
Ombuds offers help, answers
SB 485 required the Department of Consumer and Business Services to appoint a student loan ombuds who could help members of the public with complaints or inquiries about student loans. The department’s first ombuds began working in June 2022.
As of June 1, 2023, the ombuds had received 34 complaints and 104 contacts from the public.
Borrowers most commonly asked the ombuds about the Public Service Loan Forgiveness program, which forgives the remaining balance of student loans for full-time employees of governments or nonprofits who have been making qualifying payments for 10 years.
In March 2020, as part of a COVID-19 response, the U.S. Department of Education paused federal student loan repayment and collections. Interest was not accrued. These paused payments also counted toward PSLF, earning credit as though monthly payments were made. This pause will end Sept. 1.
In addition, there have recently been several announcements and changes to student loans that have caused some confusion.
- In April 2022, the U.S. Department of Education announced “Fresh Start,” an executive action to pull seven million student loan borrowers out of default.
- In August 2022, the Biden administration announced a plan to cancel up to $20,000 in student debt for eligible Pell Grant recipients. In November, the Sweet v. Cardona lawsuit against the U.S. Department of Education led to a settlement, resulting in the promise that it must approve about $6 billion in debt forgiveness for 200,000 borrowers.
- The Federal Student Loan Literacy Act, which was introduced in 2022 but did not receive a vote, would have created a federal funding source for community groups to apply toward their work with student loan borrowers.
In 2022, the Oregon ombuds started a PSLF waiver awareness campaign. As of March 31, 8,770 Oregonians had been forgiven more than $557 million in student loan debt. This is up from $216 million for 3,480 Oregonians nine months earlier.
The ombuds expects PSLF will continue to be a common topic for loan borrowers who reach out. For more information on PSLF, visit studentaid.gov/manage-loans/forgiveness-cancellation/public-service.
Other common inquiries over the past year to the ombuds were about misinformation from debt loan servicers, collection mistakes and referrals from the Oregon Department of Justice.
Plans for next year
The ombuds’ first goal for the upcoming year is to continue building out the state’s borrower education program, which is intended to offer information and resources to those with student loans.
“The lack of funding sources for coaching leaves many borrowers not knowing where to turn,” the report states. “To further borrower education, the student loan ombuds is hoping to expand the range of available presentations, record short videos, and gather more short-term and long-term policy recommendations.”
The ombuds will also be recommending policy changes to the Legislature. Short-term policy change goals include:
- More specific regulations for loan servicing.
- More protections for borrowers.
- Requiring people to be notified when they are eligible for loan forgiveness.
Long-term policy change goals include:
- Increasing supports to reduce the cost of college.
- Holding student loan servicers accountable for misinformation.
- Push for more student loan advocates at the university level.
For more information about the Student Loan Servicing Program, visit: dfr.oregon.gov/help/student-loan-help. For more information on federal student aid, visit studentaid.gov/.
Miranda Cyr reports on education for The Register-Guard. You can contact her at mcyr@registerguard.com or find her on Twitter @mirandabcyr.
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