Thought Leadership Thursday
Tools for Financial Recovery
Thought Leadership Thursday Article
Every American deserves the opportunity to reach financial security and achieve the American Dream. Unfortunately, far too many are struggling to make ends meet, and the economic and health impacts of COVID-19 have only deepened the disparities in our nation.
Recovering from COVID-19 will not only require we heal these divides, but that we think strategically about the investments we make to build a 21st century economy. I believe that answer begins with investing in our youngest Rhode Islanders, giving them the tools they need to become financially empowered, improve their quality of life, and build stronger, more resilient communities.
Since 2019, I have continued to propose and support legislation that guarantees personal finance instruction for all Rhode Island students. With the help of many committed community members, passionate advocates, and dedicated educators, personal finance instruction is now accessible at every public high school in the state; but more must be done. We must ensure all students have quality instruction in personal finance education. Without basic financial knowledge, students are more likely to make poor decisions relating to student loans, credit cards, or payday loans that may cause damage to their financial future at a young age. Furthermore, a poorly equipped generation will impact our country for years to come. Providing our students with the knowledge and skills they need to successfully navigate complex financial decisions is not only the path to personal financial empowerment, but also helps to ensure our workforce is equipped to succeed in a competitive global market.
Student debt is a crisis that threatens the financial wellbeing of millions of Americans. One aspect of the crisis that does not receive enough attention is the prevalence of poor loan servicing practices, which often direct student loan borrowers into costly forebarances they don’t need while directing them away from programs like Public Service Loan Forgiveness and Income Based Repayment that can help them better manage their loan payments.
These predatory practices by some loan servicers are having negative impacts on people’s lives, as well as our economy. I proposed legislation to reign in these bad practices and protect borrowers in Rhode Island. Working with the Attorney General’s office, we passed The Student Loan Bill of Rights, which gives Rhode Island borrowers a place to go when they are being treated unfairly by their servicer. Now in Rhode Island, servicers are forbidden from providing misleading or false information to borrowers, are required to inform borrowers of all of the loan relief options that might be available to them, and can be subject to penalties for unethical behavior
Small businesses continue to be the heart of our economy, and over the past year many small businesses have experienced extreme hardships due to the pandemic. We must all come together to support the ambitious, resilient, and innovative Main Street entrepreneurs and workers who drive our economy.
Four years ago, I launched our BankLocal program, moving millions of dollars of state cash to local community banks and credit unions to support small business lending. Through this program, each small business loan is matched up to $250,000 in state deposits. Loans made to women, minority, veteran and first-time business owners, all groups who have historically had a hard time accessing capital, are eligible for a 2-to-1 match. These deposits are fully insured and collateralized. Through this simple program we have helped more than 350 small businesses get the loans they need to survive, expand, hire and thrive.
In times of great crisis leaders need to be bold in meeting the moment. I am encouraged by the work my NAST colleagues are doing to financially empower their constituents. Together, we can ensure that all Americans have the opportunity to achieve financial success.
Yours in Service,