State Policy Action
Amid these concerns about the resumption of repayment, states continue to consider measures to address student loan debt. In the past three legislative sessions, states have considered more than 400 measures related to student loans.
Forgiveness & Repayment
States continue to develop, modify, and expand loan forgiveness or repayment programs to help borrowers reduce their debt, while offering incentives for talented, in-demand students and recent graduates to live, work and stay in their states. These programs provide borrowers with debt relief or payment support in exchange for work or service in specific professions or fields (commonly health care and education) for a period of time. More than 20 states have enacted legislation addressing student loan forgiveness programs.
Forgiveness bills for health care providers are the most common area of state forgiveness legislation over the past three legislative sessions. Georgia passed a measure that will expand the service cancelable loan program for physicians and other health care providers in underserved areas to include dental students and specific criteria for rural areas. In 2023, Idaho created the Rural Nursing Loan Repayment Program. Nurses may qualify for a total of up to $25,000 in loan repayment upon completion of three years of service in a rural area.
State legislatures continued to consider policies supporting loan repayment and forgiveness for educators. Kentucky established the Teacher Recruitment Student Loan Forgiveness Pilot Program in 2024 to provide stipends of up to $5,000 for teachers and eligible student teachers through the Student Teacher Stipend Program. Maryland authorized Anne Arundel County to establish a Student Loan Assistance Repayment Program for educators employed by the county’s public schools.
Utah created the Veterinarian Education Loan Repayment Program in 2023 with an appropriation of $2.5 million. The program will provide up to $100,000 in loan repayment for eligible veterinarians. Colorado passed a law in 2023 to expand forgiveness to six veterinarian applicants per year and increasing forgiveness awards by $5,000 more per year.
Florida legislation will require an annual report on student loan repayment programs. The law also requires the development of a design study to evaluate the effectiveness of student loan repayment programs beginning in 2025 and to be completed by 2030. Washington passed a law that requires state agencies to provide PSLF materials upon separation and develop a statewide program to increase access and remove barriers to using PSLF.
Oversight
As millions of students navigate the resumption of repayment, these borrowers face a variety of challenges. Changes in federal contracts for loan servicers have resulted in millions of borrowers having a new servicing company with different interfaces and communications. A 2024 report from the Consumer Financial Protection Bureau analyzed over 18,000 consumer complaints related to servicing errors. The report found that borrowers commonly encountered billing errors, inaccurate repayment information, and customer service failures.
States continue to consider a range of measures to address student lending oversight including licensure of servicers, creation of student loan ombudsman, and expanded oversight of private lending options available to borrowers. In the last decade, at least 18 states have passed legislation expanding licensure and regulation of servicers and more than a dozen states now have specific ombudsman in place to address borrower complaints for student lending.
In 2023, Nevada passed legislation to expand the licensure and regulation of student loan servicers. The measure also expands the duties of the student loan ombudsman created in 2020 and allows the ombudsman to make student complaints available to the state attorney general. Oklahoma passed legislation that amends the state’s Student Borrower's Bill of Rights Act to prohibit student loan servicers from failing to provide certain loan forgiveness information. Illinois modified protections for loan cosigners and created requirements for private lenders offering students refinancing options to disclose terms and conditions of refinancing the loan. New York law will require private education debt lenders to register with the superintendent of financial services.
Taxes & Other Legislation
In 2023, the U.S. Department of Education announced regulations banning most withholding of transcripts at higher education institutions. Since 2019, at least 10 states have enacted legislation that would prohibit transcript withholding because of debt owed at higher education institutions. This includes recent legislative actions in the past three years in Connecticut, Illinois, Maryland, Oregon, and Rhode Island.
New York and California passed measures to exclude student loan discharge or forgiveness amounts from state income tax. Connecticut also passed a measure in 2024 to expand student loan payment tax credits for employers who make student loan payments on behalf of an employee.
Washington passed legislation in 2023 to amend the Washington Student Loan Program for graduate students to include new provisions that specify the eligible fields of study to include fields with a workforce shortage or in high demand. These fields include but are not limited to, health care, behavioral and mental health, early education, K-12, higher education, law enforcement, public safety and others. The program is scheduled to launch in the 2025-26 academic year.
This brief is made possible with support from the Annie E. Casey Foundation. The Casey Foundation is a nonpartisan organization.