Legislation to provide student loan counseling for borrowers who are delinquent on their student loans was heard this week. The bill would appropriate funds to partner with one nonprofit organization in the state that has experience in providing student loan counseling, employs certified financial loan counselors and has multiple locations throughout the state.
The debt counseling would target borrowers to help them better understand their loan and repayment options, manage their loan repayments, and develop a personal budget based on the borrower’s financial situation including income, expenses, and other debt. The nonprofit recipient of the grant must submit a report to the Office of Higher Education that includes an evaluation of the program including data on whether borrowers who received counseling improved their loans into good standing.
Appropriations have not yet been set for the proposed legislation, but a baseline of $1.2 million in funding would allow the legislatively enacted pilot program to reach 2,400 individuals who are near or at default stage in their loan repayment delinquency.
By appropriating funds to this bill, student borrowers in Minnesota can be equipped with tools to prevent student loan debt from being an inhibitor to the growth of Minnesota’s economy and a derail the borrower’s life goals for which they sought higher education in the first place.
While the federal government has done a good job over the years in making student loans more available to a wide array of individuals pursuing higher education, it has not done enough to help borrowers make successful repayments once the loans become due. The creation of such a pilot program is not a way for students to get out from under their debt, but it’s a way of helping them get on a path to successfully pay what they owe. The bill passed the Senate Higher Education and Workforce Development Committee and re-referred to the Finance Committee. (S.F. 713)