Two bills intending to help students refinance federal loan debt failed to pass through the higher education subcommittee of the Virginia House Appropriations Committee. The measures, proposed and largely supported by Democrats in the House of Delegates, aimed to establish a board called the Virginia Education Loan Authority, which would have had the power to refinance high-interest student loans.
The Republican-controlled subcommittee tabled the proposed legislation. Some opponents of the bill were concerned the program would place too much fiscal pressure on the state government and involve it in solving a problem they claim was created by federal policies.
Del. Marcus Simon (D-Fairfax), who sponsored one of the bills, said Virginians have altogether accrued $30 billion in student loan debt, and the proposed legislation would have at least partially alleviated financial burdens for approximately 629,000 state citizens.
“The goal was to create a vehicle for Virginia borrowers to consolidate and refinance their student loan debt via private or federal means,” Simon said in an interview with The Cavalier Daily. “My bill would have brought the Virginia Education Loan Authority back and given it the additional mission to refinance people’s existing student loans with state funds at the best possible interest rates.”
Simon explained how the state government exited the business of issuing student loans in 1990s, leaving “the federal government and the private sector to take over the student loan business completely.” The former authority existed from 1972-97.
“Virginia decided that it was a business that it no longer wanted to or needed to be in,” Simon said. “The federal student loan program got big enough that it didn’t want to compete with the system here in Virginia.”
Del. Jimmie Massie (R-Henrico) said the state’s current issues regarding debt are the fault of the federal government.
Massie said the federal government acted recklessly in its lending practices, which largely arose during the first two years of Barack Obama’s presidency when Democratic majorities controlled both the House of Representatives and the Senate.
“The federal government was an irresponsible lender,” Massie said. “When a bank makes a bad loan, that bank needs to deal with the problem. The Obama administration, and the Democrats in Congress in 2010, they created this problem and they should deal with it.”
Massie said his views on the matter were not merely circumstantial, and supplying student loans is not a core function of government.
“I don’t think that the federal government should be in the student loan banking business,” Massie said. “The private sector should be doing that.”
Simon said the Obama administration is not to blame.
“I think that that betrays the partisan nature of [the Republicans’] opposition to this initiative,” he said.
Massie said he thinks President Donald Trump will exercise his business knowledge to remedy the situation.
“Donald Trump is an expert in borrowing money from banks,” Massie said. “He will understand this dynamic that the federal government made some horrible lending decisions, and that therefore the right thing to do is to go back to these students and analyze their situations one-by-one, either writing off portions of the loans or writing them off altogether.”
Although the VELA revival bills have been stopped, Simon said House of Delegates Democrats have another related piece of legislation they plan to propose.
“We have another bill which will create a student loan ombudsman office, a student loan bill of rights and start licensing student loan originators so that we can actually make sure that students do get good and accurate information going forward,” Simon said.
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