Last month, New York Governor Andrew Cuomo revealed his annual State of the State proposal and much of it was directed at student loan debt. Specifically, Governor Cuomo is interested in increasing protections for students who use financial aid to help them afford college.
To help combat the student loan debt problem, Cuomo proposed creating a student loan ombudsman to the state Department of Financial Services. This person would be responsible for answering students’ questions and complaints as well as providing helpful resources regarding student loans. The ombudsman would also help students who previously defaulted on their loans.
The state-level ombudsman is a response to the high level of uncertainty regarding the Consumer Financial Protection Bureau (CFPB). After the former director Richard Cordray resigned in November, President Trump appointed longtime CFPB critic Mick Mulvaney to fill the vacancy. Many people worry that under Republican leadership, the bureau will be dismantled.
Cuomo’s plan also requires schools to give students a summary of their borrowing with a current total of the amount they owe. It would also outline how much they can expect in monthly repayments as well as repayment term length.
Cuomo also proposed improving consumer protections within the student loan industry. Loan servicers would be required to apply for a license and comply with certain regulations to operate in New York. Servicers would also need to provide “clear and conspicuous disclosures to borrowers” and they would be banned from charging any upfront fees.
Cuomo is also seeking to protect licensed professionals from being negatively impacted by their loan payment status. In 19 different states, professionals can have their licenses suspended for missing a loan payment or defaulting on their student loans. This not only makes it more difficult for these individuals to pay back their loans, and it creates financial hardship and renders them unable to provide for themselves and their families.
This is not the first time Governor Cuomo has tackled the student loan issue; in 2015, he advocated launching a loan forgiveness program that would help individuals earning yearly salaries of $50,000 or less. He also supported the Excelsior Scholarship, a program that provided free tuition to eligible students at certain public colleges in New York.
Author: Andrew Rombach
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