Spotlight: Student Loan Debt

“Young people are really having trouble moving on with their lives. They are not able to do the things [we] did shortly after graduating because of the debt that they hold as a result of their education.” – Attorney General Ellen Rosenblum, The People’s Lawyer Podcast, 2020

“Many, many millions of students obtain a good education, but they still are saddled with debt. And so, we need to do something to make sure that those students, after they graduate…have the ability to live their lives, buy a house, have a family, get a car, own a business….” – Attorney General Ellen Rosenblum, The People’s Lawyer Podcast, 2020

Education Debt

Most students in Oregon rely on student loans to help pay for their education. The average Oregon student loan borrower owes over $36,091 by the time they graduate. Combined, Oregonians have more than $18.9 billion dollars in student loan debt. With student debt numbers this large, it is easy to understand how student loans can easily turn into the obligation of a lifetime.

The Covid-19 pandemic has only made the student debt problem worse. In 2020, as unemployment spiked around the country, 3.2 million students borrowed money for the first time. As a result, the nationwide total student loan debt balance increased 8.28% in 2020. By July of that year, 11.2% of adults with student loan debt reported that they were unable to make a payment.

Oregon’s New Student Loan Laws

Fortunately, Attorneys General play an important role in protecting students, co-signers, and former students from misleading and deceptive student loan practices.

In 2017, Oregon Governor Kate Brown signed into law Attorney General Rosenblum’s bill requiring Oregon colleges and universities to send students annual, easy-to-understand letters explaining the scope of their federal educational debt, including the amount of loans taken out, and what the potential total payment over the life of the loan could be.

In 2021, Attorney General Ellen Rosenblum helped to pass SB 485, a “Student Loan Borrowers Bill of Rights” ». The law addresses many of the problems borrowers experience with student loan servicers, or the companies that service student loans and advise borrowers of their repayment options. Many companies have shown that they do not have the borrowers’ best interests at heart, by steering borrowers toward less favorable repayment options and other harmful practices.

To help address this growing problem, the law creates a student loan ombudsperson to help educate and counsel student loan borrowers, who face complex systems of repayment. It also requires student loan servicers to maintain a license from the Department of Consumer and Business Services which will monitor, and, if necessary, sanction servicers of student loans who engage in fraudulent, deceptive, or dishonest dealing.

“This new law will put tens of thousands of Oregonians on a better and more sustainable path and will hopefully prevent what should be a manageable debt load upon graduating from becoming the obligation of a lifetime for our students.”

-Attorney General Ellen F. Rosenblum, 2021.

Download Four Signs a Student Loan Debt Relief Company is a Fraud.

Public Service Loan Forgiveness Waiver

The U.S. Department of Education announced a limited-time change to Public Service Loan Forgiveness (PSLF) program rules. Now through October 31, 2022, borrowers may receive credit for past periods of repayment that would otherwise not qualify for PSLF.

If you want background about PSLF, visit Federal Student Aid’s PSLF information page ».

Which PSLF Requirements Are Temporarily Changed?

Until October 31, 2022, you can:

Receive credit for periods of repayment on Direct, FFEL, or Perkins Loans
Count periods of repayment under any plan
Count periods of repayment on loans before consolidation
Count periods of repayment where payments were late or for less than the amount due
Get forgiveness even if not employed or not employed by a qualifying employer at the time of application and forgiveness
Count the period of service that led to eligibility for Teacher Loan Forgiveness, if you certify PSLF employment for that period
Count forbearance periods of 12 consecutive months or greater, or 36 cumulative months or greater
Count months spent in deferment before 2013, and spent in Economic Hardship Deferment on or after January 1, 2013

Which PSLF Requirements You Still Must Meet?

You still must:

Have made 120 qualifying payments or the equivalent
Have been employed by government, 501(c)(3) not-for-profit, or other not-for-profit organization that provides a qualifying service
Have worked full time
Have Direct Loans or have consolidated into Direct Consolidation Loans
Have certified qualifying employment for the periods you seek credit towards PSLF

Note: If you have Federal Family Education Program loans, Perkins, or other federal student loans, you will need to consolidate your loans into a Direct Consolidation Loan to qualify for PSLF. Before consolidating, make sure to check to see if you work for a qualifying employer.

See Federal Student Aid » to learn how to find out if you qualify for additional payments, for next steps to see if you qualify for PSLF, and for additional questions and answers.

Don’t Fall for a Student Loan Scam

Don’t accept unexpected offers of student loan repayment help or loan forgiveness without checking to see if the offer is legitimate. Scammers may use phrases such as a “pre-enrollment for all loan forgiveness” or “you must apply within the next 24 hours.” Learn how to avoid student loan scams. »

Navient AG Settlement Restitution and Private Loan Debt Cancellation

In 2022, Oregon Attorney General Ellen Rosenblum announced a settlement with Navient that resolved allegations of unlawful student loan servicing practices. In Oregon, 5,488 federal loan borrowers will receive $1,462,937 in restitution and 864 borrowers will receive $22,454,017 in private loan debt cancellation under the terms of the settlement. Below are some FAQs; for details and the most up-to-date information, please visit www.NavientAGSettlement.com ».

What relief does the settlement provide for Oregon borrowers?

Restitution: Qualifying federal loan borrowers will be issued a check of approximately $260.
Debt Cancellation: Certain qualifying private loans will be cancelled.

Who is eligible to receive restitution?

Generally, Oregon borrowers are eligible for restitution if they:

Resided in Oregon or one of the states participating in restitution relief as of January 2017 and were serviced by Navient as of January 2017;
Entered repayment on a Direct or FFEL Program loan before January 2015;
Had at least one federal loan that was eligible for income-driven repayment;
Had at least two years of consecutive verbal or administrative forbearance between October 2009 and January 2017, at least one of the forbearances was entered through a phone call, and at least half of the forbearance time was not used to bring a past-due loan current; and
Did not enroll in income-driven repayment prior to the forbearance period.

Who is eligible for private loan debt cancellation?

Borrowers who took out private subprime student loans through Sallie Mae between 2002-2014 and had more than seven consecutive months of delinquent payments prior to June 30, 2021
Borrowers with certain other private student loans made by Sallie Mae Bank and certain other lenders between 2002-2014 for borrowers to attend specific for-profit schools
Generally, to be eligible for private loan debt relief, the loan must have been in past due status for more than seven consecutive months prior to June 30, 2021
Generally, only loans that were within a statute of limitations period or still credit-reporting as of June 30, 2021, are within the scope of the debt relief
Generally, to qualify, the borrower’s mailing address on file with Navient as of June 30, 2021, must be within Oregon, one of the states participating in private loan debt cancellation, or associated with a military address postal code

Do I need to do anything to qualify for settlement relief?

Restitution payments will be automatically distributed to eligible federal loan borrowers by the settlement administrator, Rust Consulting. Checks are expected to be mailed in mid-2022.
Navient will notify eligible private loan borrowers of the discharge of their private loans in writing by mid-2022. Eligible borrowers do not need to take any action.

Closed School Discharge and Borrower Defense Advocacy

Request for Closed School Discharge for Art Institute of Portland Borrowers:

Oregon Attorney General Ellen Rosenblum wrote the U.S. Secretary of Education in 2019 to request extension of closed school discharge for students who were enrolled in schools operated by Dream Center Education Holdings, LLC (DCEH). Extraordinary misconduct and mismanagement by DCEH prevented many students from obtaining degrees, and unfairly left them to repay federal student loan debt from their time attending the failed schools.

In Oregon, DCEH operated The Art Institute of Portland, which closed in December 2018. For several years, Argosy online and Ai online also enrolled Oregon students, even though they did not have state authorization, in violation of Oregon law.

The full copy of the October 2019 letter to the U.S. Secretary of Education requesting an extension of closed school discharge for former Dream Center students is available here.

In 2021, Oregon renewed its request for closed school discharge consideration, and is awaiting a response by the U.S. Department of Education.

Request for Borrower Defense to Repayment Loan Forgiveness for ITT Borrowers:

In 2021, Oregon Attorney General Ellen Rosenblum filed an application with the U.S. Department of Education asking for the cancellation of federal student loan debt for former students who attended ITT Technical Institute. The now defunct for-profit school defrauded thousands of students by encouraging them to enroll and take out loans based on misleading information about the value of an ITT degree and empty promises of high-paying jobs after graduation.

The U.S. Department of Education agreed with our request and granted borrower defense to repayment loan forgiveness for ITT borrowers. For more information, visit US Department of Education Forgives $39.9 Million in Debt.