Montgomery County Councilman Tom Hucker is confident that he has enough support to form a student loan refinancing agency run by Montgomery County in Maryland.
Such a student loan refinancing agency could generate revenue for the county, while simultaneously helping Montgomery County residents repay their student loans by refinancing with more favorable payment terms.
In an interview with Bethesda Magazine, Councilman Hucker had the following to say, “Young people in Montgomery County are facing mountains of student debt and it not only constrains their dreams, it stunts our local economy because they aren’t able to buy houses, start businesses or further college educations.”
Hucker went on to say that he and his staff are putting the finishing touches on the council bill that will establish and fund the agency. The bill is likely to be introduced in September, after which a public hearing will commence to allow residents to present their opinions on the proposal.
In 2016, Hucker’s efforts led to Maryland state legislators passing legislation that gave Montgomery County the authority to establish the student loan refinancing agency.
The Councilman has expressed confidence that the bill will pass the all-Democratic council.
That is not to say the proposal has not been met with opposition. Montgomery County Executive Ike Leggett and Chief Administrative Officer Tim Firestine both have criticized the bill, saying that the county’s financial resources could be better spent elsewhere.
Additionally, Montgomery County’s Department of Finance estimated that the county’s student loan refinancing agency would need to spend between $20 million and $30 million to start a $100 million refinancing program.
Firestine went on to estimate that costs could be up to $5 million for the first three to five years before the agency had a self-sustaining portfolio of student loans.
A June report from Montgomery County’s Office of Legislative Oversight showed that student loan delinquency in the county is quite low, and that the county would be aided by many student loan borrowers who have “high earnings, low rates of unemployment and greater family resources.”
While states like North Dakota, Rhode Island, and South Carolina have established their own student loan agencies, no county in the U.S. has done what Hucker is proposing for his county. Hucker believes that the county’s AAA bond rating would allow the prospective county agency to offer lower interest rates than the private market
Student loan refinancing programs have become popular initiatives amongst lawmakers throughout the U.S. In March, U.S. Representative Mark Pocan, a Democrat from Wisconsin, introduced bipartisan legislation, known as the Student Loan Refinancing Act, that called for a refinancing program for federal student loans. Under this prospective law, students would be able to refinance their federal student loans to the current rates on new federal loans given out.
On a state level, state lawmakers in California presented a piece of legislation that would provide incentives for banks that offer lower interest rates on student loans that are refinanced.
Student loan debt is certainly a nationwide issue, and borrowers could use all the help they can get. According to LendEDU, 43.3 million student debtors in the U.S. owe a combined $1.41 trillion in student loan debt. Further, recent graduates owe an average of $28,400 in student loan debt. The average federal student loan default rate is currently at 11.8 percent.
Author: Mike Brown
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