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DEAL should be bolder

The Bank of North Dakota took an important first step last week when it rolled out its new student loan consolidation program with reduced interest rates that could help as many as 50,000 people burdened with heavy college debt loads. But let’s be loud and clear: North Dakota can and should do more to help its young people get through college without crippling debt loads.

The DEAL One Loan, as the student debt refinancing initiative is called, came from legislation that passed with overwhelming, bipartisan support during the 2013 session. Two options are available to residents struggling with student debt. The program offers a variable annual percentage rate, set at 1.73 percent through June 30, or a 5.34 percent fixed annual percentage rate. It’s easy to see that those who are grappling with much higher interest rates from private student loans — which commonly run at 9 to 12 percent, and sometimes are higher — can realize substantial savings.

The variable rate option cannot increase by more than 1 percent per year, and is capped at 10 percent, so those who are looking at longer repayment periods will have to bear in mind that they ultimately could see a variable rate loan reach 10 percent — frankly, that’s awfully high for a program that members of the North Dakota Industrial Commission, which oversees the Bank of North Dakota, lavished with effusive praise.

Can’t we do better than that? On the same day as the DEAL One Loan was unveiled, the Bank of North Dakota reported its 10th consecutive year of record profits, which last year reached $94.2 million, and the bank’s president predicted earnings this year will likely surpass $100 million. The bank’s total assets have more than tripled since 2004, from $2 billion to $6.8 billion. Almost a third of its lending portfolio is from student loans, accounting for a hefty chunk of those assets and, presumably, earnings.

On average, North Dakota college graduates will enter the workforce with $27,424 in debt by one recent tally, ranking 13th in the nation. We can do better than that. The state-owned Bank of North Dakota has a unique mission. It was established in 1919 to benefit the state’s farmers, small businesses and residents. Its role is to provide opportunities for the state’s people and to serve as an economic development tool — not to allow leaders to smile as the bank vault bulges. The state can and must do more to invest in a vital form of human capital, graduates of college and vocational training programs, who can be thought of as the state’s intellectual infrastructure.

When the 2013 North Dakota Legislature passed the law enabling the DEAL program, its Democratic sponsors were clear to describe the legislation as “an incremental approach” that “begins the process of offering this service to our citizens.” Going forward, officials should make it a bigger and better DEAL.