Maryland’s Montgomery County Student Loan Refinancing Initiative Requires More Research
Pictured above is Tom Hucker (left) speaking with Philip Robinson, Maryland consumer attorney.
With the consistent rise in tuition over the last few decades in both private and state-run schools, average student loan debt has continued to also sharply rise for students all over the country. In response, one Montgomery County council member in Maryland recently tried introducing a new, local student loan refinancing initiative.
Montgomery County Council Member Tom Hucker forwarded a motion to give the county the authority to offer student loan refinancing options. These particular options would offer rates lower than both federal and private interest rates today.
The idea of state-run student loans program is not new, but it is unique that a county is looking to set up their own. Earlier this year, the General Assembly of Maryland passed legislation that allowed the council to set up the financial authority to implement this refinancing operation, but as of now, no actions have been taken because more research is required.
There are some critics to the plan, and some unanswered questions.
Earlier this year, the county’s Department of Finance estimated the cost of a $100 million county refinancing program to be between $20 and $30 million. Furthermore, the report commented that “such a program is not fiscally responsible … [or the] best use of our limited County financial resources.”
Despite this, some proponents argue that the operation can become self-sustaining over time. If loan payments could pay off the initial cost, as well cover the operating costs and the staff that would be needed to run the agency, then the program could pay for itself theoretically. However, the time table for this is three to ten years, a wide range. The state would need to fund this program initially before eventually being paid back.
The council decided to seek more information from state legislative researchers, the county’s General Assembly delegation, and the county’s Revenue Authority before going forward with Tom Hucker’s proposal. This will be assisted with access to the Assembly General’s statewide study to examine the market for a statewide refinancing authority.
Nothing has been implemented yet, so what does this mean for the average Maryland student and consumer?
For those with student loan debt, it means that their state representatives, as well as local representatives, are aware of the issues that their constituents are facing and trying to act on the issue. Although Montgomery County has not been successful yet in implementing the refinancing program, it is a breath of fresh air for those who are struggling with student loan debt.
Anne Kaiser, a Democrat from Silver Spring, Maryland touched on the fact that the state would be best suited to set up a refinancing authority given its capacity. In fact, the state had a refinancing authority between the 1970’s to the early 1990’s, but it was ended due to changes in federal law. She plans on proposing a state-level refinancing initiative in 2018.
For students with debt in Maryland, any state-run refinancing initiative would be appreciated. Private lenders who offer student loan refinancing are notorious for their stricter underwriting criteria and application requirements, and there is no nationwide, federal refinancing program available.
Currently, according to LendEDU, Maryland is ranked 29th in the United States with an average student loan debt per borrower of $27,241. Maryland, and Washington D.C., is home to many private universities that leave graduates with high levels of debt. In fact, roughly 55 percent of Maryland’s students leave school with debt.
image copyright © Edward Kimmel