Student loan debt in Colorado increased 176 percent in the decade stretching from 2007 to 2017, faster than the 152 percent rate of growth nationally for such debt during the same period, according to an analysis released by those who want Colorado to license student loan service providers.
About 734,000 Colorado borrowers are paying off student loans and face a total of $26 billion in education-related debt, the study of government data released by the national group Student Borrower Protection Center and the local New Era Colorado Foundation found.
“There is a misperception that student loan debt is just this problem that affects the young in Colorado, and just those living in Denver and the affluent suburbs,” said Seth Frotman, who resigned in protest last year from his post as one of the federal government’s top student loan watchdogs. “This is not one generation’s problem or one segment of the population’s problem. Student debt has tremendous impact across all ages and all demographics and all geographic regions.”
Frotman stepped down from his job at the federal Consumer Financial Protection Bureau last year and issued a scathing letter that accused the Trump administration of undermining his agency’s enforcement efforts related to servicing of student loans. Since then, he and other former federal employees have joined to create the Student Borrower Protection Center and focused their efforts on pushing states like Colorado to take on more regulatory oversight.
“States like Colorado are not going to wait for Washington politicians to solve this mess that they have created,” Frotman said in an interview on Tuesday.
He highlighted statistics that showed that more than one out of every four middle-aged Coloradans owe student debt. Nearly half of all young adults in Colorado owe money on a student loan, he added. More than 130,000 rural Coloradans owe student loan debt, the statistics show.
Among those rural borrowers, more than 20,000 are severely delinquent, the federal data further shows.
Anothing national organization, Mapping Student Debt, is tracking the $1.5 trillion student loan debt owed nationally. While that organization hasn’t released detailed data, its website has a searchable map that confirms some of the greatest pinches regarding student debt are felt in rural areas of Colorado.
A search of that map shows that Lycan, on Colorado’s Eastern Plains, has an average per capita student loan balance that is very high when compared to the rest of the nation. Residents of the tiny Baca County town carrying student-loan debt also have an extremely high delinquency rate, the map shows.
Residents of Pagoda, southeast of Craig, also have a very high student loan debt load and extremely high delinquency rates. And those living in Kiowa in Elbert County are carrying astronomically high levels of student loan debt as are those in Shawnee, located in Park County, the map further shows. Those households at the astronomically high debt threshold are carrying 100 to 724 percent higher school loan debt than the national average of $24,271.
Very high debt loads are households carrying student loan debt 55 to 65 percent higher than that national average amount. Frotman cautioned that even those not in delinquent status struggle to make payments.
“What we’ve seen is whole bunch of people can make their payments, but their debt is impacting everything, like buying a house or saving for retirement or putting away money,” Frotman said.
Frotman’s organization and New Era Colorado support legislation pushed by Democratic legislators that would allow the Colorado Attorney General to license and review the records of student loan servicers for compliance with federal and state laws.
Such legislation passed the Democratic-controlled House last year but stalled in committee in the Republican-controlled Senate. New Era Colorado claims that it registered more than 190,000 young individuals to vote since its founding in 2006. It hopes to translate some of that activity into political clout this year at the legislature.
The backers of the legislation are more hopeful this year because the state Senate has switched to Democratic control. State Sen. Faith Winter, a Democrat from Westminster, sponsored the licensing legislation last year. She said in conjunction with the release of the data that the issue remains one of her top priorities for this year’s legislative session. Newly elected Gov. Jared Polis and Attorney General Phil Weiser, both Democrats, also highlighted student debt issues on the campaign trail.
Lawyers with student loan servicers opposed the licensing legislation last year. They argued state licensing would be duplicative of federal regulations and would confuse borrowers. Licensing of the loan service providers has become a hot issue at statehouses across the nation, driven in part by controversies related to the servicing of loans.
Navient Corp., a major servicer of private and federal student loans, is facing lawsuits alleging it drove borrowers into higher-cost repayment plans. Those suing include the states of California, Pennsylvania, Washington, California and Mississippi, and also the federal Consumer Financial Protection Bureau.
Those eager for Colorado to bolster regulation of the student loan servicing industry include Jillian Coffey, who moved to Denver after graduating from James Madison University in Virginia in 2013. She said that when she got a new job, she called her loan service provider and submitted paperwork to reduce the payments on her $25,000 in student loans due to limits on her income.
Coffey said the loan service provider misplaced the paper work and put her in a loan forbearance program that ended up adding an additional chunk of interest, a total of $237. She eventually got her information properly recorded and her loan is back on track, but the company refused to waive the increased interest costs, Coffey said.
“For me, I’m a young professional and more than $200 is a lot,” Coffey said.”It’s more than my car loan costs. I was stonewalled.”
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