Lawmakers weigh relief for student loan borrowers
(The Center Square) — Connecticut lawmakers are weighing proposals aimed at easing the financial burden of student loans on borrowers, with the fate of a federal loan forgiveness program being considered by the U.S. Supreme Court.
One proposal, which is being considered by the Legislature’s Higher Education and Employment Advancement Committee, would authorize the Connecticut Higher Education Supplemental Loan Authority to create a new loan subsidy program paying interest rates on loans for those employed in “certain high-demand professions.”
Supporters say the relief is needed to help attract and retain workers in key industries, such as healthcare and education, while providing a safety net for borrowers who have slipped into default amid the lingering economic fallout of the COVID-19 pandemic.
“Whenever the federal public health emergency does completely wind up, about 10% of Connecticut’s residents will resume paying student loans that have been in forbearance for the last three years due to the pandemic,” Ben Shaiken, a lobbyist for the Connecticut Community Nonprofit Alliance, said in testimony. “That will pull almost $200 million a month out of our economy.”
Another proposal would create a student loan ombudsman’s office in the state to provide counseling and financial support for people taking on education debt.
Supporters, like Betsy Mayotte, president and CEO of The Institute of Student Loan Advisors, said a loan ombudsman would provide a “broad and long-standing positive economic impact to the state.”
“Data shows that student loan debt delays many significant life and financial events including marriage, buying a home, saving for retirement, and having children,” she wrote in testimony in support of the bill.
A third proposal, which is pending before the Legislature’s Banking Committee, targets loan forgiveness specifically for healthcare employees who work in nursing, mental health and other acute care settings.
“We are in the midst of a healthcare staffing crisis, which is contributing to a safe patient care crisis,” John Brady, vice president of the Connecticut chapter of the American Federation of Teachers, wrote in testimony to the panel. “There are two aspects to this crisis, recruitment and retention of our professional healthcare workforce,” he said in testimony. “Nowhere is this crisis more acute than in nursing and mental health providers.”
The proposals come as the U.S. Supreme Court is set to take up legal challenges to President Joe Biden’s federal student loan forgiveness program.
Tuesday, the high court will hear arguments in two lawsuits — one filed by six Republican-led states — arguing the Biden administration does not have the authority to cancel the student loan debt under the proposed rules of the program.
Under Biden’s plan, borrowers could have $10,000 forgiven in federal loan debt and qualify depending on their annual income. The amount doubles to $20,000 for those who received a federal Pell Grant.
Biden’s plan would benefit about 454,200 student loan borrowers in Connecticut, while about half of those borrowers who received Pell Grants would qualify for the additional $10,000 in loan forgiveness, according to the U.S. Department of Education.
About 14% of Connecticut residents have student loan debt, according to 2022 data from the Education Data Initiative. At least 497,700 borrowers have more than $17.5 billion in debt, with the average for each borrower around $35,162, the data shows.
Student loan servers have come under increasing scrutiny from states and the federal government in recent years amid allegations of predatory lending that have contributed to a record level of student debt.
