Policies Should Prioritize Quality and Accountability, Not Allow Unmanageable Debt to Weigh Down Families and NC Economy

DURHAM, NORTH CAROLINA – In a comprehensive analysis of North Carolina-specific data, a Center for Responsible Lending (CRL) report released today paints a picture of a deepening student debt crisis that is distressing many communities, delaying home purchases and the creation of small businesses, and diverting dollars away from the local economy.

North Carolina’s Student Debt: Dimensions of a Crisis finds that North Carolinians are burdened with increasing—unmanageable—student debt loads. Mirroring national trends, the state of North Carolina has reduced per-pupil funding to public institutions of higher education in recent years. As tuition costs have risen, the state has experienced the second highest increase in student debt in the country from 2008 to 2018, with the amount having tripled in a decade and now totaling $44 billion.

An estimated one third of North Carolina borrowers in repayment are unable to keep up – they are in default or severely past due, which causes a cascade of harmful consequences, from damaged credit scores to difficulty getting jobs and buying or renting homes, to having wages or social security benefits garnished by the federal government.

"Our investigation found troubling trends in a state that has a national reputation for investing in higher education,” said CRL Researcher Julia Barnard, co-author of the report. “The depth of the debt crisis is evident here as more North Carolinians are finding their dreams of a bright future darkened by student debt obligations that threaten their financial stability.”

Certain communities are hit hardest by the student debt crisis in the state, and the crisis widens an already tremendous racial wealth gap. Historically-black colleges and universities (HBCUs) in North Carolina are thriving and highly ranked, but they are underfunded and students often borrow more to attend them due to a lack of family wealth. With more debt and less cushion against financial shocks, 20% of North Carolina student loan borrowers who live in communities of color have student loan debt in collections, compared to 14% in predominantly white neighborhoods. The crisis also heavily impacts rural and low-income communities, military families, women, and older North Carolinians.

For-profit colleges, including many online programs, are a major driver of student debt in North Carolina. They often target nontraditional students, parents, and veterans. Rather than helping students pursue their dreams, these schools generally leave them deep in debt without the credentials they need to reach their career potential. Debt loads carried by for-profit college students and others are made more unmanageable by problematic practices of student loan servicers.

CRL recommends greater investments in students and higher education institutions across the state, as well as strong protections against practices that increase debt loads and hold students back from pursuing career advancement and economic security.

"There is a lot that North Carolina can do to reverse this trend and recommit to our students and institutions,” said CRL Deputy Director of State Policy Lisa Stifler. “We should invest in our state’s future by putting up safeguards so that students, particularly those who are from heavily-impacted communities, are supported as they work hard to realize their potential and pursue the American dream. We need greater oversight and accountability of student loan servicers and for-profit colleges. We must maintain high standards of quality for all of our higher education institutions."

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Press Contact: carol.hammerstein@responsiblelending.org

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