Virginia Democrats Want to Refinance Student Loan Debt for Residents
Democrats in Virginia think they have the answer, announcing last week a plan to bring the Virginia Education Loan Authority back to life and giving it the authority to refinance student loans that have high interest rates attached to them. The bill, sponsored by Delegate Marcus Simon could help around 630,000 borrowers in Virginia who have outstanding student loan debt.
“Virginians collectively owe more than $30 billion dollars in student loan debt,” said Simon at a press conference announcing the initiative, which was covered by the local Virginia media. “This is creating a crisis that is hampering our Virginia economy. Interest payments are preventing our young people from buying homes, forming households and making significant purchases. We’ve studied the issue thoroughly. Now is the time for action. I look forward to the support of my colleagues across the aisle for these proposals, which will boost our economy and build our local communities.”
Student loan debt has long been a problem for millions of borrowers across the country. The size of it has prevented borrowers from buying homes, starting families, launching their own businesses and even saving for retirement. That in turn is having a negative impact on the economy and homeownership, prompting politicians to step in and try to find a solution.
Last year Simon introduced legislation to create a Student Loan Debt Refinancing Authority. That proposal was sent to the State Council on Higher Education in Virginia, Virginia 529 and the Virginia Treasury for further review. The State Council on Higher Education in Virginia found that while some states do have a refinancing program it is part of the student loan authority that already exists. The report highlighted the complexities and risks associated with creating a Student Loan Debt Refinancing Authority and offered up other options. The new bill being sponsored by Simon would create an authority that would provide refinanced loans to those who are struggling to pay back their debt and also expand the refinancing option to low risk borrowers. The department would be funded by state bonds although Simon has said it will eventually be self-sustaining and potentially a profit making mechanism for Virginia.
Meanwhile Delegate Marcia S. Price of Newport News plans to introduce another bill that would create a Student Loan Debt Refinance Authority that is similar to the Small Business Finance Authority in which it would give guarantees and financing to lenders in the private sector that would otherwise balk at refinancing risky student loan debt. “As one of the few members of the General Assembly who is still in the process of repaying student loans, I’m keenly aware of the impact these loans can have,” said Price said when announcing the legislation. “The cost of education should not be negatively life-altering. The student loan reforms being proposed are huge for Millennials and the benefits extend to Virginians of all ages. We cannot move forward with a New Virginia Economy when our next generation of leaders comes out of school crippled with debt.”