On Jan. 14, Minnesota launched a new student loan refinancing program that will allow borrowers to adjust their monthly student loan payments to lower amounts.
In a state with the fifth-highest amount of student debt in the nation, this new program will serve many constituents well. However, Minnesota should continue to build upon this program and target its attention toward those who borrow the least but struggle the most.
Many people associate the country’s jaw-dropping amount of student debt — $1.3 trillion as of November — with students who attend expensive private colleges. But most defaults are on small loans from “nontraditional borrowers” who come from poorer backgrounds and attend community or for-profit colleges with lower graduation rates.
Their personal debts might not reach six figures, but this population struggles the most with student debt repayment.
The regressive format of loan refinancing means those with the greatest amount of debt will experience the most dramatic refinancing plans.
An expensive education often results in a high-paying career, and a lower monthly payment is unlikely to make or break the financial situation of wealthy borrowers. Small loan borrowers who already struggle with monthly payments, however, are unlikely to receive plans that will offer significant relief.
As our state further develops this program, it should keep small, community college borrowers in mind. Their loan amounts may not be dramatic, but a smart refinancing plan has the potential to make the most dramatic difference in their lives.
