New bill aims to reduce student loan debt
A new bill passed by the Suffolk County Legislature would direct the Department of Economic Development and Planning to develop a pilot program allowing first-time homebuyers to receive refunds to pay down their student debt.
Proposed by presiding officer DuWayne Gregory (D-Amityville), the bill would look for a creative solution to the rising cost of living on Long Island.
“Long Island has so much to offer, and I want future generations to benefit,” Gregory said.
The legislator is concerned about the rising cost of living, coupled with the increased cost of higher education, resulting in recent graduates leaving the area for low-cost states. In a study by Long Island Index, a part of the Rauch Foundation, it was discovered how many millennials were deciding to leave for a more affordable living situation.
Long Island residents in the 18-34 year range were the most likely to move due to high living costs, at 71 percent. Similarly, Long Island residents in all age groups are more likely to move out due to costs, at a rate of 59 percent, compared to 45 percent in 2004. The number of people 18-34 years old owning a home decreased from 2015 to 2017, from 26 percent to 17 percent, while the number of people living with family increased from 35 percent to 41 percent. The number of people renting a home or apartment only increased by 1 percent.
“Long Islanders are satisfied with many facets of local life but continue to find Long Island an expensive place to live,” the researchers from Stony Brook University said. “Many have difficulty paying their rent or mortgage, say their property taxes are too high, and view the lack of affordable housing and young people or members of their immediate family moving away as a very or extremely serious problem.”
These are issues that Gregory wants to put a stop to, saying that it is becoming increasingly difficult to buy a home on the island for people just out of school or even early in their established careers. A possible route for the Department of Economic Development and Planning to take would be to couple student loans with mortgage payments, therefore saving money down the road on interest. The average mortgage loan interest rate in 2010 for the country was approximately 4 percent, while the average student loan rate is between 7 and 10 percent.
Through the establishment of the NextGen Advisory Council, a group formed in 2016 to give millennials a voice in county government, Gregory learned that affordable housing was a major concern among the age group.
“Our young people just do not have the means by which to pay down their student loans and be able to afford the costs associated with purchasing a home in which to raise a family,” Gregory said. “The result is that they are leaving the place they know and love. Businesses here are struggling to find and maintain a stable workforce. We need to consider ideas and programs that can stem the flow of residents off Long Island and find ways to entice them to stay.”
Legis. Rudy Sunderman (R-Mastic) of the 3rd District is a supporter of the plan, saying that it’s important to the economic development of the area to keep young professionals here. He added that the bill would remove a hurdle for many of them.
“It will be one less bill for the student [residents] to have to pay when trying to buy a house here on Long Island,” he said. Sunderman added that the issue is also personal for him, saying that he wants his children to have the opportunity to build a life on the island. “I want them to stay here on Long Island so I can see them grow up and have children here.”
One of the problems Gregory hopes to address with buying a home is the issue of debt-to-income ratio, which often can prevent a person from obtaining the loan needed to buy a home. The average amount owed in student debt by one person is $30,000, according to Student Loan Hero. Just under a fifth of borrowers owe over $100,000, according to the National Association of Realtors.
Similarly, a study by the Federal Reserve found that “a 10 percent increase in student loan debt causes a 1 to 2 percentage point drop in the homeownership rate for student loan borrowers during the first five years after exiting school.”
Using numbers from 2015, the Federal Reserve calculated that for the previous 10 years, the amount of student debt owed by American households more than doubled, from about $450 billion to more than $1.1 trillion.
Gregory believes that the plan to bundle the student loan with mortgage payments would receive more bipartisan support than a straight loan repayment plan.
“We could have young professionals who are dying to live and work in Suffolk County, but they can’t, so they go,” said Rich Humann, CEO and president of H2M, an engineering company in Melville with over 300 employees.
Humann spoke at the announcement for this legislation, which was hosted at H2M headquarters, along with Peter Elkowitz, president and CEO of the Long Island Housing Partnership. Elkowitz said that the bill is “a critical piece of legislation to help retain our educated young adults on Long Island.”
“This is also vital to recruiting additional, highly skilled workers for Long Island’s employees,” he added.
The Department of Economic Development will have 60 days to complete a pilot program initiative from the day the legislation is signed by the county executive. Gregory expects the final plan to be submitted by early November to account for any impact it may have on the upcoming county budget.
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