Expanding Protections for Students with Institutional Debt and Curbing Harmful Debt Collection Practices

Posted April 30, 2024
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Advocating for Institutional Debt Reform and Financial Freedom

As a current college undergraduate, I find myself constantly in a state of fight or flight as the financial burden of staying in school increases. With each passing semester, the weight of this burden grows heavier on my shoulders. Despite working two jobs and taking the maximum number of units every semester, I find myself constantly running but always falling behind in pursuit of this elusive “financial freedom.” We urgently need expanded protections for students against the mounting institutional debt. Students worldwide face scrutiny, fear of dropping out, and harmful health effects due to the weight of financial burdens, all of which I have experienced firsthand. Escaping this financial burden has taken a significant toll on my mental and physical health, a toll noticed by others even when I couldn’t slow down enough to notice it myself. The constant struggle between paying rent and purchasing an online homework code just to remain in a class is nothing short of barbaric. No one should have to choose between building their future and having a roof over their head. However, amidst this darkness, there is hope. Advocates like myself, and policymakers are fighting to reform loan payment options and provide much-needed financial assistance to students. The yearning desire for more financial help is gradually being met as we see the introduction of more flexible payment plans and reduced interest rates, offering students like myself a glimmer of hope. This is the first step toward building generational wealth, as many have already done. With a reformed protection bill in place for students, I can envision a future without the specter of institutional debt looming over me. It grants us, as students, the opportunity to reclaim our power and control over financial freedom, enabling us to continue pursuing the dream of giving back to our marginalized communities. It allows me to leave behind the excessive number of jobs required to make ends meet and focus on becoming the advocating professional I aspire to be. By persistently advocating for expanded protections for students with institutional debt and meaningful reforms in loan repayment options, I am reminded of the power collective action holds in demonstrating the need for change. Through the use of our young yet resounding voices, we can come together to challenge and transform the systems designed to watch us fail. We will break down these barriers and strive for a future where institutional debt is a relic of the past and financial freedom becomes our new normal. Join us as we forge a path toward a brighter tomorrow. Angelica Martinez Ruiz is a passionate individual who has made it her mission to provide opportunities she has received to those around her. Angelica is a senior majoring in Health Science with a Minor in Biological Sciences at the California State University of Sacramento. Being the child of immigrant parents, she encountered many hardships and barriers that only lit a fire within her to advocate for her community.

Challenges to Escaping Student Debt 

In July 2008, I embarked on my academic journey at San Diego State University, becoming the first high school graduate in my family to attend a four-year university. My family, teachers, and mentors always emphasized college as crucial. However, nobody mentioned the immense financial burden someone from my socioeconomic background would face to reach that milestone. Raised in a low-income, single-parent household with one parent incarcerated, affording college tuition and living expenses was a challenge. The 2008 housing market collapse and recession compounded these difficulties, reducing available funds and support as I began my studies. Throughout college, I juggled internships and part-time jobs to cover expenses. Despite financial aid and grants, they weren’t enough. I had to take out student loans to fulfill my dream. After graduation, I found myself in a tough job market with low starting salaries, particularly in the nonprofit sector where I wanted to work. Struggling to make loan payments due to low wages and high living costs, I considered further education to increase my prospects. Deciding to pursue a master’s degree in Nonprofit Leadership and Management at the University of San Diego, I aimed to combine my passion and work experience to advance in my field and access higher-paying roles. However, financial challenges persisted. Losing my job during my studies forced me to rely on additional graduate loans. Fortunately, I graduated and secured better-paying management positions. Yet, despite these advancements, the rising cost of living, exacerbated by the COVID-19 pandemic, made paying off student loans a monumental challenge for me and countless others nationwide. I use my voice to advocate for institutional debt reform, pushing for lower interest rates on student loans. It’s unjust that companies profit so excessively from students striving for education. I envision a future where pursuing higher education isn’t hindered by the fear of lifelong financial debt and where students have viable options to alleviate their burdens and build a better future. Rogelio Espinoza (He/Him/El) is a San Diego native where he attended San Diego State University and the University of San Diego. Currently, Rogelio is a nonprofit professional and a credentialed Associate Certified Coach (ACC) through the International Coaching Federation (ICF) and works with leaders and individuals to create personal and community transformation through values alignment, empowerment, and acceptance.

 

Fixing Institutional Debt

Student loan debt is a national crisis, with over 44 million Americans owing over $1.75 trillion. In 2010, the federal government partnered with banks to make low-interest loans available to students. However, debt collection practices have become predatory, and some people have even been arrested for not paying their loans. This is because the Department of Education outsources loan management to loan servicers, and one of the worst is Navient. Navient has been accused of poor customer service, overcharging, misleading borrowers when they enter loans, and adding nearly $4 billion of interest to student loan debt. These malicious practices are so extensive that the Consumer Financial Protection Bureau sued Navient for “failing borrowers at every stage of repayment.” However, there are policy solutions available. AB-1160 is on the California State Senate’s docket in the next few weeks. This “prohibits a school, as defined, from refusing to provide a transcript for a current or former student on the grounds that the student owes a debt, conditioning the provision of a transcript on the payment of a debt, charging a higher fee for obtaining a transcript, providing less favorable treatment of a transcript request because a student owes a debt, or using a transcript issuance as a tool for debt collection, as specified.” When universities withhold transcripts and diplomas because of institutional debt, it makes it harder for former students to get jobs and pay these debts back.  Debt and interest continue to accumulate, allowing this cycle to spiral out of control. Furthermore, we can advocate for income based repayment plans or loan plans with reduced interest rates. By doing this, we give students more flexibility in paying back their loans, instead of putting them under immediate pressure to pay back loans when they graduate. I am currently a 2nd year undergraduate student and policies like this would help me significantly in paying back my student loans. I plan to pursue a career in law, so after my undergraduate schooling, I need to attend law school. However, these debts would make it harder for me to take out more loans for further education, and interest on both loans would continue to accumulate while I attend law school. Furthermore, if I decide to take a few years off between undergrad and law school, my main focus would not be acquiring experience in the legal field to boost my law school resume but to find a job that can help me consistently make loan payments.  My struggle is not an uncommon one. According to the Department of Education, more students are taking significantly more debt to attend graduate education, but average earnings post-grad have not risen nearly as much. Too many students take expensive loans relative to what they will be able to repay based on the typical earnings of graduates in their specific program. The answer is simple. In order to truly invest in the next generation and boost our nation’s economic strength, we must simply make earning money easier. Shay Patel is a 2nd year undergraduate student at the University of California, Riverside studying Public Policy Analysis and Economics. He aims to pursue a career as a criminal defense attorney and hopes to have a significant impact in criminal justice reform movement.