Letter: No-interest student loans could have a huge upside
North Dakota is an outstanding state to call home, and one of our many assets is having our own state bank. No other state has one. The Bank of North Dakota provides opportunities for residents including a great student loan consolidation program, DEAL One. They know how to do student loans.
The Forum’s editorial on April 27 stated that “the program is a good start but the state can and should do more to reduce crushing student debts.” The editorial went on to say that the mission of the bank is “to serve as an economic development tool – not to allow leaders to smile as the bank vault bulges” ($94.2 million to the state general fund last year).
Certainly both parties and the governor want an educated, permanent workforce throughout the state. My idea is to offer no-interest student loans. If a graduate lives and works in North Dakota, holds a degree or certificate, and consolidates their loans with the Bank of North Dakota, they would pay no interest. If the graduate leaves the state, they would keep their loan, but the interest rate would convert to a current rate.
The same April issue of The Forum included an article on a North Dakota marketing campaign intended for recruiting and retaining a workforce. The challenge of the campaign will be “how to best persuade people to uproot and move here.” No-interest student loans might make the difference whether a graduate moves here or somewhere else. The marketability is zero interest rate, not a lower interest rate.
If a graduate has a $50,000 DEAL One loan at the current fixed interest rate of 5.29 percent APR, they would pay $2,645 a year in interest, $220 a month. This is a car payment, help with a mortgage, health insurance, or they could apply it to the principal and pay off their student loan sooner.
This is about economic development, pure and simple. Since these are the educated and skilled workers, they will pay income taxes, sales taxes, and – without the burden of high student loan payments – likely, property taxes. What is the downside? In my opinion, not much, but the upside is huge.
If elected, I would introduce a bill for no-interest student loans aimed at recruiting and retaining a workforce.
Anderson is Democratic candidate for District 41 North Dakota House of Representatives.