Minnesota Senate reviews funding increase for student loan counseling program

In a recent meeting of the Minnesota Senate Committee on Higher Education, lawmakers discussed a significant proposal aimed at alleviating the burden of student loan debt for residents. Senate File 1611 seeks to increase funding for the Office of Higher Education by $250,000 annually, up from the current $200,000, to enhance student loan debt counseling services. This initiative is particularly crucial as nearly 800,000 Minnesotans carry student loans, with an average balance of over $34,000.

Senator Omar Moveda, who introduced the bill, shared personal insights into the challenges faced by borrowers, emphasizing the long-term impacts of student debt on financial stability and mental well-being. He highlighted how student loan payments can limit borrowers' ability to manage other essential expenses, such as rent and household bills. The senator noted that delinquency on loans can severely affect credit scores, creating barriers to housing and employment opportunities.

The meeting featured testimony from Becky Bakarian, Senior Director of Financial and Employment Services at Lutheran Social Services (LSS), which has been administering a grant program for student loan counseling since 2019. Bakarian reported that LSS has successfully counseled over 4,700 borrowers, helping them navigate the complexities of repayment plans and avoid default. She emphasized the importance of these services, particularly for first-generation college students and those struggling to balance loan payments with other financial obligations.

The proposed funding increase aims to serve an additional 500 borrowers, providing them with the necessary support to manage their student loans effectively. Bakarian noted that 93% of borrowers who received counseling reported increased confidence in their repayment abilities, and 95% avoided default for at least a year after their sessions.

As the committee deliberated, members acknowledged the growing demand for such counseling services, especially in light of recent changes in federal loan policies. Senator Moveda reiterated the importance of supporting this initiative, stating that it not only aids borrowers in managing their loans but also contributes to their overall financial health.

The committee decided to hold Senate File 1611 for possible inclusion in future discussions, signaling a commitment to addressing the pressing issue of student loan debt in Minnesota. As the landscape of higher education financing continues to evolve, the support for counseling services remains a vital resource for many residents navigating the complexities of student loans.