Local & State
|Costly lessons: North Carolina student loan debt reaches crisis level|
|Spike in borrowing reaches $44 billion in 2018|
|Published Thursday, September 19, 2019 10:40 am|
|A spike in student loan borrowing in the last decade has pushed the bill owed among North Carolinians to $44 million according to the Center for Responsible Lending.|
RALEIGH – Student loan debt among North Carolina residents has ballooned in the past decade, according to the latest report from the Durham-based Center for Responsible Lending.
Between 2008 and 2018, North Carolinians' outstanding federal and private student loan debts increased by 286%, from $15.4 billion in 2008 to almost $44 billion in 2018.
Lisa Stifler, the center’s deputy director of state policy, says poor oversight and lack of accountability for student loan servicers and debt collectors have contributed to the problem.
“A lot of that is centered around protecting the industry, not looking out for the interests of borrowers,” she said. “And that’s where we feel like states could play a role.
“North Carolina can play a role in making sure that our residents our treated fairly and are able to pay off their loans, and not saddled with long-term debt that has significant negative consequences.”
Currently, around 1.2 million North Carolina residents have outstanding student loan debt.
According to the report, one-third of North Carolina borrowers have defaulted on their student loans.
Even if payments are made on time, Stifler says the crushing amount of debt taken on by young people is having negative ripple effects on local economies.
“On average, nationally at least, home purchases are delayed seven years because of student debt,” she points out. “People aren't starting businesses or are struggling with their businesses because of student loan debt.
“And you know, we're also seeing that people are struggling saving for retirement, and just having savings at all.”
Stifler says communities of color are especially hard-hit.
“In North Carolina, household income is $25,000 less for families of color than white families,” she said. “So, with less wealth and less income, students of color – when they go to school - are having to borrow more.”
The report says state legislators should act to protect borrowers, since the U.S. Department of Education has recently taken steps to roll back existing protections against student loan-servicing abuses, including safeguards against companies with histories of fraudulent practices.
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