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Bill Brudvik, Published September 10 2012

Letter: Bank of North Dakota can do much better for college students

Earlier this year, the Bank of North Dakota announced record profits of $70.3 million. The bank 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 the profits were derived from student loan interest. Depending on when the student graduated, the interest for a Bank of North Dakota “DEAL” loan ranges from 6 percent to 8 percent. This at a time when you can finance a house for 2.75 percent, or purchase a car, motor home, motorcycle or boat for 1.9 percent in special promotions.

Studies have shown the average college student graduates with $30,000 in student loans. This number can double, triple or even more if the student attends a for-profit college or goes on to get an advanced degree. Studies have also shown that at this point in time one-half of college graduates are not finding jobs. Whether or not you have a job does not stop the student loan repayment obligation. And, even if you have an entry-level job, your income may not be sufficient to meet the repayment obligation. This can adversely affect the individual’s credit ratings and inhibit their ability to purchase a car, a home, start a business or any other borrowing needs.

The Bank of North Dakota requires students under the age of 24 to have a co-signer, usually a parent. If the 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 now becomes 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 loan debt.

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

• Lower student loan interest to 1.9 percent.

• Forgive student loans after a period of time if the student stays in North Dakota.

• Provide repayment options based on net disposable income.

• Make student loans available to returning veterans at 0 percent interest.

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

Brudvik is a Mayville, N.D., attorney.