Meeting the Moment: How CSS Is Ready to Assist New York Student Loan Borrowers
David R. Jones, The Urban Agenda
The recent U.S. Supreme Court decision striking down President Biden’s student debt relief plan has significant implications. Over 16 million Americans who were approved for debt relief, along with millions with pending applications, now face the risk of default when the suspension on loan payments and interest ends this fall. Prior to this decision, the nation’s student loan crisis was already staggering, with 43 million borrowers collectively owing approximately $1.7 trillion in debt. In New York alone, the situation is dire, with over $90 billion in student debt held by 2.4 million borrowers. The canceled relief plan could have wiped out the debt for more than a million borrowers, amounting to $16.3 billion in forgiveness in New York.
The challenge ahead is daunting, with millions of borrowers simultaneously entering repayment, an unprecedented situation. Moreover, 40 percent of borrowers will have experienced a change in loan servicers, leaving providers ill-equipped to handle the surge in demand and effectively assist borrowers. Many individuals will be entering repayment for the first time ever, and with inflation at an all-time high, a significant portion of them will likely struggle to pay or become unable to do so. As a result, a distressing increase in delinquency and defaults is anticipated, as acknowledged by the current administration.
Communities of Color Most Harmed by Student Debt Crisis
What is truly disconcerting is the disproportionate impact that resuming payments will have on communities of color. A recent report revealed that student debt-to-income ratios have been steadily increasing over the past decade, particularly for non-white and economically disadvantaged communities. This means that non-repayment has become even more challenging for non-white borrowers. It is crucial to recognize the exacerbation of the student debt crisis in these communities, particularly Black and brown communities, and take immediate action to address it.
In recognition of the dire circumstances faced by student loan borrowers, especially those from marginalized backgrounds, the Community Service Society launched the Education Debt Consumer Assistance Program (EDCAP) in 2019.
EDCAP is the first program of its kind, exclusively dedicated to helping borrowers manage their student loan debt and, whenever possible, eliminate it entirely. Through our work, we have discovered that the student loan system is incredibly complex, affecting individuals of all ages, demographics, and educational backgrounds. From people with law degrees to those living in transitional housing, we have been able to assist borrowers in addressing their student debt burdens.
One crucial lesson we have learned is that borrowers require specialized and unbiased one-on-one assistance. There is no one-size-fits-all approach to tackling student debt. Given the numerous repayment options available and the unique financial and personal circumstances of each borrower, it takes a knowledgeable expert to develop a tailored strategy for managing their student loan debt in both the short and long term. Equally important is the provision of free and unbiased services. It is evident that loan servicers do not always prioritize borrowers’ best interests, often steering them toward deferments and forbearances instead of exploring more favorable alternatives.
Consider the case of Siv B, a 60-year old New York educator who for privacy reasons asked to be identified by her first name and first initial of her last name. Siv took out a $99,000 loan to finance her daughter’s college education. For ten years she made regular payments toward the loan with the hope of qualifying for Public Service Loan Forgiveness. But each time she applied she was rejected.
“I was about to give up when I heard about EDCAP during a virtual counseling session organized by my union. I reached out and they worked with me,” said Siv, whose $127,000 in remaining student debt was forgiven. “I was so happy. It’s a huge weight and stress off my life.”
Repayment Campaign
Last year, with increased funding from Governor Hochul and the State Legislature, EDCAP expanded its reach by collaborating with ten community-based organizations across the state. These organizations are now providing direct consumer assistance to borrowers throughout New York, ensuring that EDCAP plays a critical role in helping individuals resume their loan payments and, ideally, take advantage of various relief programs to eliminate their debt as soon as possible. To further this mission, we are launching a robust repayment campaign this month.
As part of this campaign, borrowers will have access to a wealth of information and resources developed by student loan experts on the EDCAP website (www.edcapny.org). More importantly, they will be able to avail themselves of free and unbiased student loan counseling sessions.
With the resumption of student loan payments and the recent Supreme Court ruling creating challenges for New York student loan borrowers, EDCAP stands as a vital resource that borrowers can turn to for help, especially those hardest hit by this crisis. Borrowers can learn more and get resources at www.edcapny.org or get one-on-one help by calling 888-614-5004 or via email at edcap@cssny.org.
By addressing this moment head-on, borrowers can find relief and support to overcome the hurdles that lie ahead.