Bill creates refinance program for Montanans’ private student loans
By Freddy Monares/UM Legislative News Service
HELENA – Rep. Zach Brown, D-Bozeman, says student loans affect a college graduate’s — and the state’s — financial future.
“It is totally a constraint on our economy, and something that’s holding young families and young working Montanans back,” Brown said.
Brown is carrying a package of bills this legislative session meant to reform student loan debt. The bills already passed out of the House in March and are now being heard by the Senate.
One of the bills, House Bill 591, would give the state’s Board of Investments the option to borrow $40 million from the coal tax trust fund. That would pay for a public program that would refinance high-interest private loans for Montana residents who attended an in-state public university.
The Senate will hear first testimony on the bill Friday. It passed the House in March on a 56-44 vote.
Brown said right now is the best time for a program like this, with low interest rates for refinancing loans and the Legislature’s proposed cuts to higher education funding.
“The point of this bill is to say, instead of investing in bonds that benefit out-of-state folks, why don’t we invest in Montanans?” Brown said. “You can literally create an investment with a positive return for the coal trust fund with interest, out of creating this refinancing program.”
During debate in the House, Rep. Dennis Lenz, R-Billings, opposed the bill and said it would reduce the amount of money in the coal tax trust fund for what he said he sees as an optional loan.
“First of all – first one out of the gate – nobody has forced anyone to take a school loan,” Lenz said.
The Department of Commerce expressed concerns in the bill’s fiscal note about the impact the program might have on the Montana Public Employees’ Retirement System, which is funded through the coal tax fund.
“We are constantly trying to keep these pensions in place. This has the potential of undermining it,” Lenz said.
Brown said if the economics don’t provide a return for the coal tax trust fund, the Board of Investments does not have to administer the program.
“If they do pencil out, this is a program that would literally put money back in the pockets of working Montanans who are burdened with high-interest student loans,” Brown said.
Brown is also carrying House Bill 631, which would provide loan repayment assistance to Montana residents who graduate from college and commit to operating a farm for at least five years in the state. The bill passed the House in March on a 62-38 vote, and had its first hearing in the Senate on Wednesday.
Freddy Monares is a reporter with the UM Legislative News Service, a partnership of the University of Montana School of Journalism, the Montana Broadcasters Association and the Greater Montana Foundation.