Our Policy Priorities
Student loan debt in North Carolina is not a personal failing — it is a systems problem with a policy solution. More than 1.4 million borrowers across our state carry $52.2 billion in debt, navigating a federal system that has shifted more in the past five years than in its entire history. These are our four priorities for meaningful, durable change.
Pass a Student Loan Borrowers' Bill of Rights
"The loan service company could not answer questions nor provide guidance. Merely through the assistance of an acquaintance, I learned that I must consolidate my loans in order to qualify for PSLF. Nearly two years of payments towards my initial loan payments, paid in the honest and fair spirit of the law, will not count towards loan forgiveness."North Carolina servicemember, CFPB complaint, 2018
The Problem
North Carolina — like most other states — has no state-level oversight of student loan servicers. When servicers make errors like misapplying payments, providing false information, losing paperwork, or steering borrowers into more expensive plans, the people of our state have nowhere to turn. The federal system provides minimal oversight and even more minimal accountability, and borrowers face consequences that follow them for decades. Real borrowers in our communities have been misled by servicers and dealt with damaged credit, wage garnishment, withheld tax returns, and lost opportunities for homeownership and economic opportunity.
Student loan servicers are among the only financial services operating in North Carolina without licensing requirements or state regulatory oversight. Meanwhile, 18 states and the District of Columbia have already passed Student Loan Borrowers' Bills of Rights in various forms to protect their residents.
Why This Matters
Historically, federal oversight has confirmed that the problem is real and widespread. As recently as 2024, the Consumer Financial Protection Bureau documented systemic illegal practices across student loan markets, including:
Misleading borrowers about refinancing by giving false impressions that they will not lose access to federal loan cancellation programs.
Deceptive billing practices, including issuing statements with incorrect payment amounts and debiting unauthorized amounts.
Mishandling income-driven repayment applications, with examiners finding "numerous problems" with how servicers process applications for programs designed to make payments affordable.
Failing to provide adequate consumer support, with phone wait times sometimes escalating up to 16 hours; borrowers waited, on average, eight months or more for servicers to resolve issues.
Denying rightful benefits by denying disability discharge applications for eligible borrowers and falsely claiming borrowers were ineligible for autopay discounts.
The harm is quantifiable and severe. The CFPB's 2024 Student Loan Ombudsman Report analyzed complaints and found that just 73 individual borrowers experienced over $500,000 in financial harm, averaging $14,000 per borrower. These financial harms result in real-life implications, with borrowers reporting that they've missed rent and car payments, lost mortgage eligibility, and faced homelessness — all because of servicer errors, not errors on their part.
Beyond just servicer errors, in 2025 it took a lawsuit to force the Department of Education to follow its own regulations. In February 2025, the Department removed income-driven repayment applications from its website and discretely ordered servicers to halt all processing of these applications, as well as the processing of forgiveness for borrowers who had already met the requirements. The American Federation of Teachers sued the Department, and the lawsuit revealed:
Backlogs of over 800,000 income-driven repayment applications as of December 2025.
Over 1 million borrowers waiting for application processing at one point.
327,955 borrowers had their income-driven repayment application rejected in August 2025 due to "unforeseen ambiguity."
Fewer than 3% of Public Service Loan Forgiveness Buy Back applications were processed, with average wait times exceeding 8 months.
Only 170 borrowers received income-driven repayment forgiveness and 280 received Public Service Loan Forgiveness in a single reporting period, despite hundreds of thousands being eligible.
Meanwhile, the servicers and contractors doing the processing claim that their contracts with the Department of Education shield them from legal responsibility for the harm they cause. This claim is disputed directly by the Consumer Financial Protection Bureau:
"Servicers claim that because they are operating within the four corners of their contract, they are immune from being held responsible for violations of consumer protection laws. They are not. Servicers, regardless of programmatic changes, have an obligation to ensure that they do not violate consumer financial protection law."
Consumer Financial Protection BureauWhen servicers and lenders don't live up to their obligations, vulnerable populations suffer the most. Communities of color, those with low- to middle-income, and borrowers with the least financial education face the worst practices and have the fewest resources to fight back. Many simply disengage and give up on understanding or fighting for what they are owed in the face of what feels like insurmountable barriers.
The Opportunity: Deliver on Protections Most Think They Already Have
All states without one should pass a Student Loan Borrowers' Bill of Rights, which creates a framework to protect borrowers. North Carolina's would do so through four key components:
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Licensing and RegulationMortgage servicers and debt collectors already have laws and regulations — this bill would mean the same for student loan servicers, who would need to be licensed and follow clear rules about how they treat borrowers. Companies that engage in predatory practices would face real consequences.
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A Student Loan OmbudsmanWhen servicers make errors or borrowers need support, a dedicated advocate within the Office of the Commissioner of Banks would receive and respond to borrower complaints, monitor state and federal policy developments, and compile data on systemic problems. This position would give borrowers a voice and ensure state leaders understand the reality of student debt.
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Borrower Education InfrastructureThe state would develop and maintain education resources, working with colleges, servicers, and advocacy organizations to ensure borrowers know their rights and available resources.
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Meaningful Enforcement AuthorityThe most notable and important element of the bill would grant power to the Commissioner of Banks to investigate issues and treat violations as unfair and deceptive trade practices under North Carolina law. Borrowers would also have Private Right of Action, meaning they could individually pursue action to enforce their rights in court.
Why Now?
The evidence shows clearly that student loan servicers "routinely made blunders, oversights, and errors that harmed millions of borrowers and likely cost them millions of dollars," according to the Consumer Financial Protection Bureau. Federal oversight and advocacy groups have identified mountains of proof that borrowers are not receiving fair treatment when it comes to their student loans. Borrowers lose money and months of their lives trapped in loops trying to solve problems that they did not cause.
In MDC interviews with current and past North Carolina borrowers, participants consistently ranked the Borrowers' Bill of Rights among their top policy priorities and many were shocked to learn that they don't already have these protections.
At least in North Carolina, the Student Borrowers' Bill of Rights has been introduced multiple times with strong bipartisan support. Versions in 2021, 2023, and 2025 all had primary and secondary sponsors from both major political parties. Despite this support, the bill has always stalled in committee. The barrier does not appear to be based on policy disagreements, but rather concern about expanding state regulatory authority. However, states have clear authority to license and regulate financial services, and 19 governments have done so successfully.
While states are limited in what they can do to change the rules and regulations of existing federal programs, state-level protection can fill an important gap in accountability by treating student loan servicers like any other financial institution in their states, obligating fair practices and enforcing consequences for violations. These regulations represent worker protections, consumer protections, and protection for North Carolinians from well-documented predatory practices and systems failures.
Develop a Statewide Education and Outreach Infrastructure
"We're all college educated. Most of us have master's degrees, we still don't understand how the program works. Having the information synthesized in a way that's understandable and the actions we need to take — that was helpful."
— Carrie C., student loan borrower
The Problem
Right now, student loan borrowers are navigating a system that has changed more in the last five years than in the entire history of U.S. federal student loan programs. Federal policies have shifted and shifted back again, servicers provide contradictory or incorrect information, and program requirements that applied last month may be obsolete today. The Department of Education, the Consumer Financial Protection Bureau, and consumer advocates have all documented how unclear and inconsistent guidance makes repayment navigation extremely difficult for borrowers.
This extreme complexity is made worse by a fragmented system where the Department of Education and loan servicers operate with limited coordination, leaving borrowers to receive incomplete, outdated, or conflicting information.
Borrowers have nowhere to turn for accurate, reliable help. Lawsuits, reductions in force at the Department of Education combined with shifting responsibilities for servicers, and major policy overhauls have worsened the crisis. Communication challenges continue as servicers provide misinformation, and mistrust runs at an all-time high at the same time as borrowers applying for income-driven plans sit in a 1.5 million application backlog.
All these administrative challenges end up feeling like a "rigged" system, and this fuels disengagement among borrowers who are forced to navigate this alone, without a trusted, statewide "front door" for clear, accurate guidance. The result is that borrowers make mistakes that lead directly to default, wage garnishment, and destroyed credit. Programs meant to help — such as income-driven repayment and loan forgiveness — sit unused because borrowers can't navigate the complexity without support or advocacy, often through no fault of their own.
This is not a borrower problem. It is a system problem. And it has a solvable policy response.
Why This Matters
Student loan debt has impacts that go beyond personal financial burden, creating circumstances that push borrowers into default, delinquency, or even wage garnishment with consequences that damage families and communities for decades.
Without reliable guidance, borrowers make mistakes that lead directly to default, wage garnishment, tax refund seizure, and negative credit impacts. Once in default, borrowers face barriers to employment, housing, and transportation that make it nearly impossible to recover.
Student debt forces borrowers to abandon major life decisions. Two out of three student loan borrowers live paycheck to paycheck and prioritize more immediate expenses such as groceries, childcare, or housing over loan payments.
Public service sectors lose qualified professionals who can't navigate loan forgiveness programs. North Carolina hemorrhages teachers, nurses, social workers, and other essential workers to states with clearer pathways to debt relief.
Black and Latinx borrowers face the highest default rates and carry disproportionate debt burdens. Without support infrastructure to intervene, these communities experience cascading harm that widens existing racial wealth gaps.
The Opportunity: Deliver Support Through Systems People Can Trust
The ask is straightforward: North Carolina should create a statewide "front door" for student loan help — anchored by an independent Student Loan Ombuds or Advocate — so borrowers have one trusted place to get guidance, resolve errors, and stay informed as federal policy changes.
Establish a Student Loan Ombuds or Advocate
A Student Loan Ombuds is an independent office or position within the state government with directives to investigate borrower complaints, help borrowers communicate with servicers, track patterns of misconduct, and serve as the state's voice on student loan policy. This office would ensure that as federal policy changes, there is someone monitoring those changes and translating them into clear guidance for borrowers. Fifteen U.S. states already have positions specific to this function, and utilize a variety of models to provide support for the borrowers they serve. North Carolina's proposed Student Loan Borrowers' Bill of Rights provides one pathway to create this office.
To ensure it is effective, the Ombuds/Advocate should be explicitly authorized to:
- Maintain a plain-language, statewide "source of truth" on repayment and forgiveness options.
- Provide navigation support and a clear pathway for complaints and escalation.
- Train and equip trusted messengers — employers, colleges, libraries, nonprofits, workforce systems — with ready-to-use materials.
- Publish an annual report to policymakers on complaint trends, barriers to relief programs, geographic and equity gaps, and recommended fixes.
Create a Centralized Information Hub
A state-run website, similar to Virginia or Oregon's Student Loan Help websites, could serve as the authoritative source for student loan information. This hub would provide plain-language explanations of critical student loan management elements, such as repayment programs, guides for common but confusing tasks, loan calculators and decision-tools for borrowing, and direct access to individualized help. A state platform can curate and localize high-quality guidance, update it as rules change, and connect borrowers to help quickly when problems arise.
Activate Trusted Messengers and Existing Networks
Borrowers are more likely to engage when support comes through systems they already trust. Employers, local governments, colleges, financial institutions, and nonprofits already communicate with large audiences through established channels — benefits portals, utility bills, campus services, branch counseling, and community programs. Equipping those messengers with resources and ready-made materials may represent an extremely direct and low-lift pathway to engaging borrowers in the places where they are already seeking guidance.
How North Carolina Pays for It
A Self-Sustaining Funding Model
The most fiscally durable approach is to make the infrastructure self-sustaining through student-loan servicer licensing fees and annual assessments — similar to how states fund other financial services oversight.
Start-up: A one-time appropriation to build the portal and launch outreach in year one, with ongoing costs covered by fees and assessments in year two and beyond.
Sustaining: A one-time licensing/application fee and an annual assessment on licensed servicers, deposited into a dedicated account restricted to the Ombuds/Advocate office, the information hub, outreach and training, and translation and accessibility.
This model supports accountability and sustainability while minimizing long-term reliance on the General Fund.
Launch a Rural Workforce Student Loan Repayment Program for Lower-Wage Essential Workers
The Problem
"I am just now graduating medical school from UNC and am very excited for my career in family medicine! I am extremely stressed about loan repayment at this point in time, and fear that I may choose a private practice job in the future to make more money. I am a certified bilingual physician (English/Spanish) and am really passionate about working at an FQHC and/or academic setting, and having guaranteed loan forgiveness will help me and many underserved populations tremendously."American Academy of Family Physicians Member
North Carolina already invests in student loan relief, but the current landscape is built for specific professions and service settings, primarily licensed health roles and certain public service pathways. The state administers the North Carolina Loan Repayment Program through the Office of Rural Health, the State Loan Repayment Program for behavioral health providers, and Forgivable Education Loans for Service for students preparing for designated critical shortage professions.
These programs share an important strength: they treat student debt relief as an exchange for verified service in high-need roles and places. They also share a limitation: because they are profession- and credential-specific, they leave out large portions of the rural workforce that keep communities functioning — childcare providers, direct care workers, EMS staff, behavioral health support workers, medical assistants, dental assistants, early-career technicians, and other essential jobs. Many of these workers don't qualify for Public Service Loan Forgiveness, don't have employers with the HR capacity to navigate federal complexity, or can't afford to wait a decade for relief.
Why This Matters
When rural essential jobs are unstable, the consequences cascade quickly. If childcare providers leave, parents can't work reliably. When direct care roles go unfilled, families absorb the burden and health systems strain. When clinics can't retain health support staff, access bottlenecks and burnout grows. When EMS and crisis-support roles churn, public safety capacity weakens.
Student debt isn't the only driver of these staffing pressures, but it is a lever the state can move — especially for workers in lower-wage roles who don't qualify for Public Service Loan Forgiveness or can't afford to wait ten years for relief. A modest, predictable loan repayment benefit can be the difference between staying in a rural community and leaving for a higher-wage labor market.
Turnover costs conservatively about 33% of an employee's base pay. For a $35,000/year role, that's roughly $11,500 in turnover cost per departure, before accounting for service disruptions.
Home care turnover was nearly 75% in 2024, and direct care workers' median wage was $17.36/hour — a combination that makes retention fragile and replacement constant.
A 2026 analysis estimates childcare challenges for families with children under five cost $172 billion annually in lost earnings and productivity, including $38 billion in employer losses.
The Opportunity
North Carolina doesn't need to reinvent its approach — it can extend what already works. The recommendation is to create a North Carolina Rural Workforce Student Loan Repayment Program that provides meaningful, near-term relief to lower-wage workers in rural and high-need counties who are in essential roles. Rather than requiring a narrow license or a specific employer type, eligibility would be grounded in three realities: the worker's role is essential to community functioning, the worker is serving in a rural or high-need place, and the worker's wages make repayment disproportionately hard.
The program should be designed to offer multi-year awards, paid annually over a two- to four-year commitment, so workers see relief soon enough to stay. It also means keeping administration simple enough for small rural employers: straightforward verification, clear renewal rules, and coordination with existing programs so workers aren't forced to choose between supports or get lost in conflicting requirements.
How North Carolina Pays for It
Build the program into Job Development Investment Grant deals in Tier 1 and Tier 2 counties. For projects located in the 80 most economically distressed counties, the state could make "workforce debt relief" an eligible, required, or strongly incentivized part of the JDIG package.
Practically, that could look like a standard term in the JDIG agreement: participating employers contribute a defined amount per eligible worker per year into a state-administered loan repayment benefit, with the state providing a match or enhancement for Tier 1/2 projects.
Use the Industrial Development Fund structure as the vehicle for Tier targeting. While the Utility Account itself is infrastructure-focused, it provides a strong policy precedent: North Carolina already uses the Industrial Development Fund to concentrate resources in distressed counties to make jobs possible.
Policymakers could extend that logic by creating a companion "workforce" account that funds student loan repayment for essential workers in Tier 1/2 counties.
Why Now?
This is the right moment for North Carolina to act because federal student loan policy is volatile, workforce shortages in essential roles are persistent, and the state already has a clear framework for targeting investments to distressed counties.
Borrowers and employers are operating in a climate of federal uncertainty and shifting rules, including active conflict and litigation around student-loan relief pathways that many workers rely on to stay in public-facing jobs. That uncertainty makes it harder for borrowers to plan and easier for frustration to turn into delinquency, job changes, or outmigration — especially in lower-wage roles.
In short: helping essential rural workers stay is in the best interest of all of North Carolina — not only the workers receiving relief, but the families relying on childcare and care services, the patients relying on stable clinics, and the employers relying on a workforce that can show up.
Engage Employers to Support Borrowers
The Problem: Student Debt Is a Workforce Crisis
"I have been practicing in rural and underserved areas for almost 10 years and have made job decisions based on participating in the PSLF program. Part of that was turning down higher-paying jobs to serve in rural areas, knowing that my loans would be taken care of without having to worry about my salary. The thought that it could go away or change when I am almost done is extremely frustrating."American Academy of Family Physicians Member
Student debt is a pervasive and complex issue in modern times, and it creates measurable workplace impacts for the nearly 44 million Americans who carry it. Research from MissionSquare illustrates that student debt can be a primary source of workplace stress:
of private sector employees think of their debt levels as problematic
of public sector employees consider their debt levels problematic
of private sector employees consider student loans before accepting a job offer
of employees say they would commit to 5+ years of employment if they received student loan benefits
Student debt also affects workplace culture and morale, sometimes significantly. The evidence shows that employees with student debt report negative work morale compared to their peers without debt. When employees struggle silently with financial stress, it affects not just their individual productivity but team dynamics and organizational health.
Why Employers Are the Right Messengers
Employers are uniquely positioned to help their employees with student debt. They're already trusted messengers for complex financial considerations — trusted by employees to manage health insurance, help with retirement planning, and more. Student loan guidance is a natural extension of this role, especially when education is so closely associated with career growth and success.
Most importantly, employers already have the infrastructure in place: Human Resources, benefits coordinators, employee assistance programs, and regular communication channels. Integrating student debt supports doesn't require building new systems and often doesn't even require additional resources to show understanding of all that financial wellness includes.
The Opportunity: Low-Cost, High-Impact
Options to support employees with student debt range from completely free to tax-advantaged employer contributions, allowing organizations to choose approaches that fit their budget and capacity.
Employees will be more committed. 86% of employees say they would commit to 5+ years of employment if they received student loan benefits. Replacing an employee typically costs 6+ months of their salary — reduced turnover alone could cover the costs of student loan assistance.
Morale will improve. Acknowledging employees' financial realities reduces stress, builds trust, and demonstrates that organizational values extend to workforce wellbeing.
It's a recruitment advantage. In competitive markets, student loan support differentiates employers more than simply offering competitive salaries for the more than half of employees who consider their loans when accepting jobs.
It may even save money. Certain student loan supports like employer-based repayment assistance can reduce tax burdens for both employers and employees, making it more valuable than equivalent salary increases.
The Public Service Promise
For government agencies and nonprofits, the Public Service Loan Forgiveness program represents a powerful benefit that costs employers nothing. After 10 years of qualifying payments, employees' remaining federal student loan balances can be completely forgiven.
This is a federal program, not an employer expense — but most public service employees don't know they qualify. By simply communicating Public Service Loan Forgiveness eligibility and streamlining the annual certification process, public service employers can make lower salaries and longer-term commitments competitive with private sector positions.
From Free to Tax-Advantaged
Integrate basic student loan information into existing communications like new employee orientation materials, benefits enrollment packets, or employee intranets.
Basic information to communicate would include income-driven repayment options for more affordable payments, deferment and forbearance options, and simple reminders that regular repayment prevents delinquency and default.
Many employers already offer Employee Assistance Programs with financial counseling, and student loan counseling may already be offered, or available at little or no additional cost.
Public service employers specifically can include Public Service Loan Forgiveness eligibility in job postings, add information to new employee orientation, and designate a point-person to process certification requests.
Contract with nonprofit or trusted subscription-based assistance services to provide dedicated student loan education sessions or one-on-one counseling resources for employees.
The Institute of Student Loan Advisors offers support for organizations with 2,100 employees or less for just $4,000 a year.
Work with your existing Employee Assistance Program to add student loan supports, or develop borrower-friendly internal policies that allow time for student loan management requirements or educational sessions on compensated time.
The SECURE 2.0 Act in 2022 allows employers to offer matching contributions to retirement plans based on an employee's qualified student loan payments — reach out to your existing retirement plan administrator, as most are set up to provide this benefit already.
Employers can contribute up to $5,250 per year per employee toward student loan payments on a tax-free basis for both employer and employee, providing the same favorable tax treatment as retirement contributions. Contributions under Section 127 can also work alongside Public Service Loan Forgiveness.
Develop an organizational repayment program to make payments directly to employees' loan servicers, potentially milestone-based to incentivize retention.