Letter to the editor: Bank of N.D. can handle student loans in a better way

Earlier this year the Bank of North Dakota announced record profits of $70.3 million. The Bank of North Dakota is a model of excellence in its support of economic development, small business and agriculture and the envy of many other states. The bank’s profits are designated for deposit into the state’s general fund.

But there is a dark side. Thirty-five percent of profits were derived from student loan interest. Depending on when a student graduated, the interest for a BND “deal” loan ranges from 6 to 8 percent. This at a time when you can finance a house for 2.75 percent, or purchase a car, motorhome, motorcycle or boat for 1.9 percent in special promotions.

Studies show the average college student graduates with up to $30,000 in student loans. This number can double, triple or more if the student attends a for-profit college or goes on to get an advanced degree. Studies also show that half of college graduates nationwide are not finding jobs. Whether you have a job does not stop the student loan repayment obligation. And, even if you have a job, your income may not be sufficient to meet the repayment obligation. This can adversely affect graduates’ credit ratings and inhibit their abilities to purchase cars or homes, start businesses or borrow for other reasons.

BND requires students younger than 24 to have a co-signer, usually a parent. If a college graduate is unemployed or earning less than his or her ability to repay the loan, this brings the parent’s available funds into play. Studies have shown that 62 percent of retirement-aged people have less than $50,000 in savings. This is at risk if the student is unable to repay the loan. The problem is compounded if the parent has more than one child with student loans.

When it comes to student loans, BND could do better and become an even more preeminent institution than it already is. The bank should consider one or more of the following:

1. Lower student loan interest to 1.9 percent

2. Forgive student loans after a period of time for students who stay in North Dakota

3. Provide repayment options based on net disposable income

4. Make student loans available to returning veterans at zero interest

BND is managed by the Industrial Commission, which is comprised of the governor, agriculture commissioner and attorney general. Let’s hope whoever is elected governor this fall will bring his influence to bear on the bank to think outside the box and do the right thing for North Dakota’s students.

Bill Brudvik

Mayville, N.D.

Tags: opinion, letters, education