A Democratic state Senate candidate called Tuesday for tighter controls on private companies that provide student loans, a proposal that his incumbent opponent dismissed as disingenuous.
Chap Petersen, during a news conference at George Mason University, said that if elected, he would introduce legislation to limit the interest and penalties private lenders can charge, force the companies to disclose their for-profit status to potential borrowers, and outlaw agreements between schools and loan companies that steer students toward a specific lender.
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Petersen, a Fairfax City lawyer, is locked in an increasingly combative campaign for the 34th District seat with Sen. Jeannemarie Devolites Davis, R-Vienna.
He is targeting companies that loan money to students who do not qualify for federal aid or need additional money to attend college. The industry has comeunder heavy scrutiny after media and government investigations disclosed the steep interest rates the companies charge and highlighted questionable relationships between schools and lenders.
“There are some very disturbing things going on,” Petersen said. “You’re looking at people who borrowed $35,000 or $40,000 and now they’re $75,000 in debt because they lost their job, missed payments, and are now buried by penalties and late fees.”
Davis, seeking her second Senate term, said Petersen is only raising the student-loan issue so he can distort her relationship with Sallie Mae, the country’s largest private loan company. Petersen referred to Davis’ tenure as a “director” on the “board of Sallie Mae,” and implied she oversaw the company during “some of the worst abusive practices committed by Sallie Mae.”
Davis pointed out she was a presidential appointee to a board overseeing Sallie Mae’s transition from a government-supported agency to a private company, and was not on the business’s governing board of directors.
“He is trying to make it sound like I profited from Sallie Mae, when in fact I was a watchdog,” Davis told The Examiner. “He is only talking about this so he can take a shot at me. He doesn’t care about student loans. It’s a ruse.”
