As state lawmakers address student debt, report examines refinancing programs elsewhere
Washington lawmakers passed a "student loan bill of rights" earlier this year aimed at helping people with student-loan debt. The law created a new advocate position in the Washington Student Achievement Council, to receive complaints about student loans and help borrowers understand their rights.
The law also required loan servicing companies to be licensed by the state. In addition, legislators asked the Washington State Institute for Public Policy, a nonpartisan agency that does research for the Legislature, to do a study about states that offer student loan refinancing programs.
Sometimes borrowers refinance their debt to get a lower interest rate or to reduce monthly payments, and more than a dozen states offer refinancing programs, according to the study.
Madeline Barch, a senior research associate with WSIPP and author of the report, said some states such as Maine see refinancing programs as a way to prevent brain drain.
“It makes the cost of living there lower because they don’t have to struggle with large student loan monthly payments, and so it’s more attractive to stay in Maine than to move to nearby Boston, where potentially you could make more money,” she said.
Besides Maine, other states that offer student loan refinancing include Alaska, North Dakota and Rhode Island.
Student loans are a concern for an increasing number of people in Washington.
According to a report from Washington Attorney General Bob Ferguson, about 760,000 people in the state had student loan debt in 2012, and the number likely exceeds 800,000 now. In 2004, there were about 467,000 student loan borrowers in the state. From 2004 to 2012, the average loan debt climbed to $23,900 from $14,800.
That said, Washington residents are not among the highest burdened in the country. The state ranks 23rd in the nation for the level of student-loan debt amassed by college graduates, according to the study, which cited data from the Consumer Financial Protection Bureau.