New York state Gov. Andrew Cuomo’s Student Protection Unit should not only address the corruption among loan providers, but also implement initiatives to advertise the free loan service offered through the U.S. Department of Education.

Student loan debt is a major problem in New York state. According to the Federal Reserve Bank of New York, the average student debt per borrower is $27,310, the third highest of any state.

Cuomo established the unit to investigate and reprimand corruption among loan providers. On Jan. 22, the unit took its first official action when it issued subpoenas to 13 student debt relief companies as part of an investigation into allegations of false advertising and improper fees.

These private companies charge students to consolidate multiple college loans into a single loan — a service that is available for free through the U.S. Department of Education.

To address the issue, Cuomo’s unit should consider initiatives that educate students about their loan options as early as possible. Public high schools can host seminars that inform parents and students about the government’s loan service. Doing so could make more students aware of their upcoming financial situations.

Colleges should require incoming freshmen to take a safe loan education program, just as many require that students complete alcohol education programs. Loan options should also be emphasized during freshman orientation and when students receive their college acceptance letters. It is important that students are made aware of these issues early on.

At Syracuse University, all freshmen are required to take a freshman forum class. Loan education should be an integral part of this class, which focuses on the transition to college and the fundamentals of good decision-making.

On a broader scale, television campaign advertising could be an effective way to reach a wide audience. The Cuomo administration should release a public service announcement to advertise the government’s service. Doing so could spread the message to parents and students across the state.

It is not enough to punish debt relief companies for corrupt practices. Though this is important, it will not help in educating the public about their loan options. Students and parents must learn about the available government programs to make the best decisions for their families.

 

 

Published on January 30, 2014 at 2:59 am

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