Poll shows loan servicers make it worse for Mainers struggling to pay down student debt
AUGUSTA, Maine — The Maine Center for Economic Policy (MECEP) and the Center for Responsible Lending (CRL) released a poll Nov. 29 that shows student loan debt is preventing a staggering number of borrowers from buying a home (42 percent), saving for retirement (56 percent) or even covering the cost of basic necessities (35 percent).
According to a press release from MECEP, the poll also reveals that women borrowers, borrowers who attended a for-profit college and borrowers in Androscoggin, Franklin, and Oxford counties are more likely to be affected by the student loan crisis. These borrowers’ student loan debt has affected their ability to afford necessities, or even to attend doctor’s appointments or pick up a prescription. Further, the poll shows that more than 4 in 10 respondents know someone who moved to another state in order to take a job that will help them afford payments.
Lake Research Partners designed and administered this survey in October 2018. The survey reached a total of 400 adults — 31 by telephone and 369 online — with education debt in Maine.
Problems with loan servicers are linked to trouble paying down student debt, the release stated. The most common problems survey respondents report are those that lowered their credit score or increased the overall cost of their loans, or that they were not told about income-based repayment plans.
States across the country are ground zero for the fallout of the student loan crisis. States are finding ways to aid and relieve their borrowers. But the student loan industry has consistently lobbied the U.S. Department of Education to roll back state efforts to crack down on their abusive practices. In response, states are fighting back, leading the charge against student loan servicers who are mismanaging loans, obscuring loan deadlines and failing to provide students affordable repayment options, forcing borrowers into default and driving up loan costs.
The Department of Education, under Secretary Betsy DeVos’ guidance, has aggressively fought to prohibit state laws from regulating servicers and student loan debt collectors. Last fall, 26 state attorneys general, including Governor-Elect Janet Mills, wrote a letter to Secretary DeVos clarifying the rights of states to enforce their own laws, pointing to the narrow scope of the Higher Education Act and other federal statutes in the preemption of state laws concerning student loan servicing and debt collection.
“For Maine to thrive, families here need to be able to plant roots in their communities and participate fully in our state’s economy, but student debt is making it harder and harder for families to build lives in our state,” said MECEP Associate Director Jody Harris. “In 2017, education debt held by Mainers reached nearly $6 billion, while more and more Mainers report that predatory loan servicers are forcing them into default and increasing the cost of their loan. It’s time to curb predatory and misleading practices that leave Mainers with education debt further and further behind.”
“This poll shows the excruciating challenges Mainers go through in order to stay above water, especially women,” said CRL Senior Policy Counsel Whitney Barkley-Denney.“These borrowers, along with forty-four million Americans, share the burden of a still-growing $1.5 trillion student loan debt, making it difficult for them to buy a house, start a business, and raise a family. States may not have the power to forgive federal student loan debt, but they should have every right to oversee student loan servicers operating in their state — borrowers deserve to have affordable payment plans that allow them to pay down their debt while being able to pay for everyday expenses. Unfortunately, in Maine, the efforts of the student loan industry and their lobbyists have so far been successful, with former Governor Paul LePage twice vetoing the legislature’s effort to oversee student loan servicers.”
Key findings from the poll include:
- 60 percent of respondents say they’ve struggled to pay a student loan payment. (65 percent of women responded that they’ve struggled to pay a payment compared to 53 percent of men.)
- 56 percent of respondents say that student loan debt is causing them to reduce the amount they save for retirement.
- 51 percent of respondents say that they have had to delay a major purchase like a car. (Of those living in Maine’s Western counties, 61 percent say they’ve had to delay a major purchase like buying a car while 54 percent have said that they’ve had to delay buying a home.)
- Of those who have had to skip a bill in order to pay their loans, more than 40 percent skipped a medical bill and one in four skipped their rent or mortgage.
- More than 40 percent of respondents know someone who moved to another state in order to take a job that will help them afford payments. Men, people in Cumberland County and people who attended a for-profit college are among those who are more likely to know someone who moved.
- One in three Maine student loan borrowers have been unable to buy necessities such as food and clothing in order to make their loan payments.
- 28 percent of Maine student loan borrowers say that problems with student loan servicers caused them to default on their loan.