The crushing burden of student loan debt and what one Colorado lawmaker wants to do about it

One thing Linsi Bowers learned growing up in rural Colorado was the importance of a college education.

She heard it again and again as a student in Sterling, a windswept farm town in the northeast corner of Colorado: Your degree is your ticket to success. So she left Sterling for the University of Colorado in Boulder, graduating in 2016 as a sociology major.

She has put her degree to work at Bridge House, serving as an employment specialist to down-and-out adults.

“I’m thankful to be here,” she says. “It’s helping people stay out of prison and off the streets.”

But Bowers, the 23-year-old daughter of a disabled mother and a truck driver, is paying a high price to help.

She graduated from a public university with $70,000 in student loan debt, mostly from private loans with interest rates of up to 10 percent. Bowers  says she spends more than $1,000 a month, the majority of her take-home income, on student loan payments. She hopes to pay off her four-year college debt in 12 to 15 years.

Her staggering level of debt is not that unusual today. In Colorado alone, 761,000 people owe $24 billion in student loans, an average of more than $30,000 per person, according to the federal Consumer Financial Protection Finance Bureau.

These debts are collected by what critics call an unregulated industry that has added billions of dollars to the debt total through systematic failures to inform debtors of federal relief programs.

State Rep. Faith Winter, a Westminster Democrat, hopes to change that in the 2018 legislative session starting Jan. 10. She’s been working with the attorney general’s office on a bill to license student loan debt collectors and oversee their business activities.

“Home mortgages, auto loans, payday loans,” all are regulated by the state consumer protection debt law, she says. “The only debt that’s left out is student loan debt. That’s some of the highest debt that Coloradans have. It doesn’t make sense to protect consumers in all other kinds of debts and leave out student loans.”

Thirteen states have pursued bills to regulate student loan servicers, and three plus the District of Columbia have enacted legislation already, according to Charley Olena, a consumer advocate working on the Colorado bill.

Winfield Crigler, executive director of the Student Loan Servicing Alliance, responded that debt collectors see a blame-the-messenger aspect to proposed state regulation of their business.

“It’s frustrating to be a servicer. We don’t come into the picture until after the borrower has borrowed the money,” she says.

State legislation would complicate already extensive contracts with the federal  Department of Education and “regulate one symptom of the disease without getting to the cause of the disease at all,” Crigler says.

Crigler says the real causes of concern are the rising prices of college degrees and the importance degrees now hold for career and financial success.

That said, she adds:  “Can we do better? Yes.”

Consumer advocates acknowledge that improved oversight of the companies hired to collect college loan payments will do little to dent the trillion-dollar debt accumulated by students nationwide. Still, the federal Consumer Financial Protection Bureau has alleged in a lawsuit that the largest servicer, Navient, added $4 billion to total student debts by failing to inform borrowers of their rights.

Specifically, the federal agency said Navient offered troubled borrowers forbearance — a pause in payments that increased their principal debt — when they could have qualified for a federal income-driven repayment program that covered interest without raising their overall debts.

Navient “systematically made it harder for borrowers to obtain the important right to pay according to what they could afford,” the lawsuit alleges.

Navient, an offshoot of student loan giant Sallie Mae, has denied wrongdoing. A spokeswoman referred questions to Crigler, who says the alleged mistakes “go way back in terms of years. This is not what’s happening today.”

She added that student loan holders need to know and act on their rights — and sometimes neglect to take advice. “Servicers do reach out to these borrowers,” she says.

Bowers did talk to servicers about her debt. But she says they wrongly advised her twice that she could convert her private student loans into a federal income-based program to cut her costs.

Rep. Winter contends servicers would do a better job of reaching out under state supervision. Winter is 37, married with two children, already saving for her kids’ college and still paying off her own college debts — with dad’s help — 15 years after she graduated. She knows that debt collector regulation won’t change that reality.

Still, as an exercise, she, her aide and her intern tried calling their loan servicers last year just to find out what they still owe. The response time ranged “from 35 minutes to six hours,” she said.

At New Era Colorado,  a nonprofit that works to register young voters, advocacy director Olena said student loan debt has leapt to the forefront of their concerns. Moreover, “the overall issue we’re seeing is an accelerating problem with the way that student loan servicers are interacting with borrowers,” she said.

She said the complaints cover a lot of ground: having trouble repaying loans or consolidating them to lower payments, improper use of payments, not getting accurate information about a complicated federal program.

Advocates of state regulation, including New Era Colorado and United Veterans Committee of Colorado, point to the Trump administration’s attacks on the federal consumer protection agency and the law that created it, saying the president wants to eliminate the agency that has taken complaints from student borrowers and filed suit on their behalf.

Linsi Bowers says she could not turn to her parents for financial help. Her mother had worked at a Sterling prison until she was disabled by a broken back on the job. Her stepfather hauled feed.

So she worked at restaurants and borrowed the balance of her college costs. If not for a partner who covers housing, she could hardly afford to rent an apartment in Boulder and pay her college debts, let alone eat, she says.

What she finds most disheartening is the seeming indifference of legislators who have the power to make a college education in Colorado less burdensome.

“The politicians say, ‘You signed the papers,'” she says. “I was 18. I was told all my life that you need a college degree to succeed.”

Photo of Linsi Bowers by Kelsey Ray, The Colorado Independent