According to the state, more than half of Virginia college students graduate in debt, half of whom owe more than $25,000. Democratic state lawmakers are now proposing the state step in directly: by getting into the student loan business.
Two years ago, Delegate Marcus Simon - a Democrat of Northern Virginia - wanted to help students struggling to pay back loans. His idea? Create a state agency that would purchase student’s debt from them, and give them better terms to pay it back.
Higher education officials, though, warned that was risky.
“What the folks at Treasure and SCHEV said is ‘That’s a great approach, the problem is if somebody really needs to refinance their existing student loans they’re going to be one of your riskier class of borrowers.”
So to minimize that risk, Simon is back with a new proposal: creating a whole student loan program.
In addition to offering re-financing for those who have hefty private loans, it would also offer its own loans from the get-go; just like the federal government does.
“That way you can spread out that risk. So you get folks coming into UVA and William & Mary or going to VCU for medical school that are taking on loans that we think they’ve got a really good prospect of paying those back, that’s very manageable.”
The idea isn’t new. Rhode Island, North Dakota, and Wisconsin, all also have state-supported student loans.