California’s student loan debt has topped $148 billion, and Sacramento wants to help.
A new program created by California’s consumer protection agency aims to provide Golden State borrowers with free, personalized assistance as they navigate the complex, byzantine student loan system.
The Student Loan Empowerment Network is designed to provide financial guidance and assistance to borrowers, including help securing income-based repayment plans and federal student loan forgiveness for those working in public service.
“The student loan system is riddled with systemic problems that make it virtually difficult, if not impossible, for people to access the rights and benefits they are entitled to under the law,” said Senior Deputy Commissioner Suzanne Martindale. and Consumer Financial Protection in the Department of Innovation.
Martindale said that in many cases, borrowers may qualify for some form of loan forgiveness but don’t know how to get it because “the information is unclear because the targets keep changing and because loan servicers can’t seem to give it to you. An accurate answer.
“People need a place to go to get accurate, fair information and work with people who have their best financial interests at heart,” Martindale said.
Borrowers who want assistance from the program can fill out an application at studentloanhelp.dfpi.ca.gov or call (888) 774-2227.
The borrower will contact a financial counseling agency or legal aid agency. In Los Angeles, these include Public Counsel, the Legal Aid Foundation of Los Angeles and the Koreatown Youth and Community Center.
The program will offer a combination of webinars and financial coaching sessions. Martindale said some borrowers facing “very complex legal issues” may need one-on-one help, including those with older private loans from issuers that have failed, or those who have defaulted on their loans. .
Gov. Gavin Newsom’s 2022-2023 budget allocates $7.25 million for student loan assistance and education programs and $2.25 million for a statewide marketing campaign.
Martindale said organizations participating in the loan program will be required to track people who move to income-based payment plans, document their employment to receive public service loan forgiveness and have their loans discharged.
She said using public programs to help Californians reduce their loan burdens could bring significant economic benefits to the state. She said she hopes the program becomes a permanent fixture in the state, though looming funding shortfalls make that less certain.
About 40% of federal student loan borrowers missed their payments last fall after a pandemic-era student debt freeze expired, according to federal data.
Borrowers who are behind on their federal loans have until September 30 of this year to report it to the credit bureaus, but in the meantime, interest will continue to accrue.
