Student loan debt: our young people are buried in it—so deep they can hardly see out. But I have 13 words that will help alleviate the burden on students here, improve our business environment, and even attract educated workers to West Virginia.
But before we get to that—and before we get to the petition at the bottom of this post where you can sign to show your support for this legislation—let’s first acknowledge that for our kids, it’s a genuine struggle to stay in West Virginia, and let’s talk about why.
West Virginia’s Missing Generation
West Virginia doesn’t have a diverse economy that provides lots of economic opportunities for educated young people to stay… and our state’s lack of an educated workforce means it’s also hard to attract companies here so we can diversify.
It’s a vicious circle.
For that reason, we have a brain drain of our best and brightest, many of whom are more or less forced to leave WV in order to get paid enough in their fields to meet student loan payments after they graduate.
That’s because even trying to afford an education anymore is a racket designed to funnel money away from regular people and to the already rich.
Upward mobility? That’s for dollar bills, not people.
All that money pours up to the already rich.
The Predatory Student Loan Collection Industry
Frankly, many student loan servicers are woefully unresponsive to students trying to make payments. And that’s putting it kindly.Their pervasive abuse, their non-response—and the redislosure of repayment terms that happens when servicers sell your debt back and forth-–has the effect of knocking students off automated payment plans, causing late/missed payments, provoking expensive fees for “rehab,” and/or even driving students into default. That seems to be the actual aim in many cases. In some cases, students don’t even find out they’re in default until it’s too late. Servicers may even pre-date notification letters—either that or perhaps they just let them sit on a desk somewhere for weeks before sending.
Even when students diligently try to work with servicers, they may not even be able to get anyone on the phone to take care of problems. In other cases, servicers they talk to simply lie or contradict their own statements. They will tell you anything to get more money from you, but won’t actually fix any problems with billing.
Even students who have paid off their loans are abused and stolen from. The problems with predatory student loan collectors—“student loan sharks”—are severe and ongoing.
Senator Elizabeth Warren has talked about “the extraordinary lengths to which the [Department of Education] will go to protect these companies when they break the law.”
And let me head you off, here: that was the Obama administration’s Department of Ed. But that said, do we think DeVos will make things better?
These companies want to force students into default.
Why Student Debt Collection Companies Abuse Students
Now here’s why: under programs like IBR—an Income-Based Repayment plan meant to make payments affordable for struggling students—your student loan debt is forgiven after 20 years of payment (or 25 in some cases). You make payments of 10% of your “disposable income” with IBR. That means if you owe a lot, but make not too much—hello, WV!—then these banks and collection agencies are not making the money they want to.
Twenty years of $100 a month payments equals $24K. And when students are struggling, they should also be able to qualify for temporary deferments that further reduce the amount they’ll pay. But the average student graduates with $37K in debt.
These companies can make more money when struggling students are in default.
It’s far more lucrative to drive students into default, to con them into signing payment plans not in their best interests, to refuse to credit payments properly, to throw them off the plans meant to help them, and so on. When students are in default, these companies can garnish their wages and even their social security checks—at a rate 50% higher than the new IBR plans—until their deaths, rather than just for 20 or 25 years.
It’s their bottom line they’re concerned about, not those pesky legal requirements.
Why student debt is this bad
After the 2008 crash, banks got a bail-out, but regular people didn’t.
And that had consequences.
Look, let’s be honest here: the program meant to assist distressed homeowners was either designed to help Big Banks—or else it accidentally helped them rather than the homeowners. Whether by accident or design, the effect was the same: even of those who qualified for the program, very few were actually helped. But banks made out like bandits!
You think the folks who lost their homes were able to help with their kids’ educations? Or, heck, pay their own student loans? And on top of everything, federal student aid and grants have not kept pace with the cost of tuition.
The truth is that the Great Recession didn’t just affect the bankers… but they were the only ones that got real help.
Students aren’t seeing relief from plans meant to help them. And the fact that tuition and fees are so ridiculously expensive means that student debt is MASSIVE. In states like WV, where average income is low and poverty is high, we suffer disproportionately.
And to reiterate, that’s one of the reasons it’s so hard to attract businesses to this state. We’re ranked number 50—the worst state for business—and it’s not because business taxes are too high. For the record, we actually fall mid-pack in that, at number 18. If the business tax rate was all there was to it, we’d be at ranked 18th best for business, too.
We’re the worst state for business because businesses want good infrastructure and an educated work force. We don’t have that.
So here’s a way we can help; here’s something that we CAN do in WV to help students.
13 words to relieve student debt, improve our business environment, and attract educated workers to WV
Into WV Code §46A-2-130, we simply need to add a 2(d).
“Garnishment for student loan debt that cannot be discharged by bankruptcy is prohibited.”
BOOM.
That’s right: We eliminate wage garnishment for student loans.
You think this’ll provide an incentive for companies to actually try working with students on payment plans rather that purposely trying to throw them into default so they can garnish wages?
I sure think so.
Questions About Ending Wage Garnishment for Student Loans in WV
Why not just legislate instead that student debt can be discharged through bankruptcy?
Bankruptcy law is federal; it isn’t something we can change as a state. It needs changed, don’t get me wrong—and not just because of student loan debt.
Billionaires can declare bankruptcy over and over and still remain billionaires. And it shocks the conscience that a corporation can declare bankruptcy on miner pension benefits and then pay execs—themselves—millions more in bonuses than it would have cost to just meet those pension obligations. It’s legalized theft.
That has to change.
And while all that nonsense seems to be okay with those in power for some rea$on, impoverished students can’t in normal circumstances discharge their student debt via bankruptcy. Doesn’t matter if their parents’ or grandparents’ pensions were stolen or not, or if their homes or possessions were wrongfully foreclosed on, or if the company they worked for laid them off to ship jobs overseas.
Rigged.
Looking at what we can change for students at the state level, that’s not bankruptcy law, and it’s not federal programs for student debt relief or payment programs. But what we CAN do, and very easily, is prevent wage garnishment for student loans.
Why don’t these deadbeat students just pay what they owe?
Yeah, if we’re talking deadbeats, let’s talk millionaires and billionaires declaring bankruptcy or “reorganizing” to protect their personal assets while stealing from people who will struggle to recover. Or those rich guys just not paying taxes. Companies like Mylan do corporate inversions to dodge US taxes, while gouging people for lifesaving drugs. Corporate welfare enables the real deadbeats.
But look, I don’t disagree that it would be far better for students if they can stay current with payments. Students will probably agree with that, too. In fact, as I mentioned, there are already programs that should allow students options for reasonable repayment.
But those programs are being administered by the crooks, and as I described above, their objective is to knock students off the programs so they can make more money.
So the problem this addresses is that the programs meant to help students are administered by abusive companies like Performant, companies not remotely interested in helping students… and in some cases not even interested in whether the debt they’re trying to collect actually belongs to the person they want to collect from.
Right now, we’re letting the foxes run the hen house.
Performant racked up 346 complaints with the Better Business Bureau. The company is accused of applying wage garnishments for debt already paid, calling debtors at work, calling family members of debtors at work, and other inappropriate and potentially illegal behavior. One consumer complaint posted online says Performant repeatedly pestered a 90 year old World War II vet for a nonexistent student loan with Wells Fargo.
And as I explained, even companies not as bad as Performant or Great Lakes essentially have perverse incentives to throw students off the programs.
So remember: prohibiting wage garnishment doesn’t forgive the debt. That means students still owe the money and still face the consequences on their credit. But it does provide an incentive for the predatory companies to stop eating students alive, to genuinely try to find a way to get overburdened people on payment programs they can afford, and to stop abusing students just because they can get away with it.
Why not provide publicly-funded tuition at public colleges instead?
I’m all for that, too, and while I’d prefer to see a federal program to fund public college, states can do it, too. New York, for example, has a state plan for funding higher ed.
But eliminating wage garnishment for student loans is a good way to help students who have already graduated, and a good way to attract educated people to the state. And in addition, this isn’t something the state has to find a way to fund and administer like a public tuition program would require.
We need this, in addition to a publicly-funded tuition program.
Would this mean my student debt is forgiven?
No, this would not forgive your debt. Students would still owe it. Non-payment would still appear on credit reports, and it may affect your ability to borrow, or loan terms you get. Should you move away from WV, you would not have the same protections from these companies.
But eliminating wage garnishment for student loans unable to be discharged in bankruptcy would provide relief from the abuse of these companies, and it would allow our educated kids to stay here.
It would even attract educated people from elsewhere to come here. It could help bring the workforce we need in order to make our state more attractive to business!
What type of paperwork would I have to fill out as a student to get the wage garnishment for student loans stopped?
None. There would be no program to join or qualify for. It’s just thirteen magic words to get signed into law:
“Garnishment for any student loan debt that cannot discharged by bankruptcy is prohibited.”
Those words would prohibit wage garnishment in WV for student loans that can’t be discharged through bankruptcy.
I’d encourage you to pay if you’re able. But when making payments is not an option—or when your servicing company prefers to put you in a situation where they can garnish your wages rather than give you the legal benefits to which you’re entitled—then taking away their power to abuse you will be an important equalizer to make sure vulnerable people aren’t exploited.
How do we get elimination of wage garnishment for student loans in WV passed?
This is the harder part, for sure. And you can bet a lot of companies will be buying politicians to protect their wage garnishment power.
So…
Holler from the Hollers. DEMAND this from your legislators.
Vote out candidates who oppose these protections, or who take money from student loan companies.
Find candidates who’ll support the legislation, and volunteer or donate to them, whether they’re in your district or not. Pressure on your own legislator is important, but supporting good candidates across the state is important, too.
Finally, sign our petition. Lots of names could help state legislators who want to sponsor this legislation.
Petition: Prohibit Wage Garnishment for Student Loan Debt in WV.
Into WV Code §46A-2-130, add 2(d): “Garnishment for any student loan debt that cannot discharged by bankruptcy is prohibited.”
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