Remember Friday nights at Blockbuster, keeping your
Tamagotchi alive between classes, or rocking a pair of wide-leg jeans with Doc
Martens? The ’90s are back on TikTok, in our closets, even in the soundtrack of
our kids’ Spotify playlists. And maybe, it’s time for one more revival: the
Virginia Education Loan Authority (VELA). Like the Beanie Babies in your attic,
VELA was packed away in 1997 under Governor George Allen. But with Washington
pulling back on student lending, Virginia may need to bring this retro policy
back into circulation.
On August 14th, the State Council of Higher Education for Virginia (SCHEV)
appeared before the House Emergency Committee on Impacts of Federal
Workforce and Funding Reductions to lay out the hard
truth. The federal government’s
so-called “One Big Beautiful Bill” (H.R. 1) is about to make paying for college
a lot harder. Pell eligibility will shrink. Parent PLUS and Graduate PLUS loans,
which are already lifelines for many working- and middle-class families, are
being capped. And new “earnings outcome” rules could put pressure on Virginia
colleges that serve a higher share of first-generation and lower-income
students.
SCHEV’s analysts showed us the stark numbers. Virginia families already face
billions of dollars in unmet need every year, even before these federal cuts.
Without access to federal lending capacity, students will be forced to cobble
together private loans with higher interest rates or, more likely, to walk away
from higher education altogether. Add to that declining demographics,
skepticism about the return on investment, and the loss of international
students, and Virginia’s higher-ed system is staring at a perfect storm.
If this feels familiar, it should. The last time federal support was dialed
back and college affordability became a crisis, Virginia responded by creating
VELA. It was a homegrown solution that recognized education as an investment in
our own future workforce and economy.
And this isn’t the first time the idea of reviving VELA has been floated. Back
in 2016, I introduced legislation to reimagine VELA as a student loan
refinancing authority. The proposal would have allowed Virginia to sell
tax-free municipal bonds and let qualified borrowers refinance their student
debt at lower rates. The goal was to give responsible borrowers a fair shot to
get out from under crushing monthly payments, freeing up resources to buy
homes, start families, and invest in our communities. At the time, SCHEV and
our Treasurer’s office studied the model and found it feasible, though the bill
never made it out of committee. Yet the blueprint remains on the shelf, ready
to be dusted off.
Some may think this is too ambitious. However, we’ve already laid groundwork to protect borrowers. In 2020, I carried legislation establishing Virginia’s Student Borrower Bill of Rights, licensing student loan servicers, and creating the Qualified Education Loan Ombudsman housed at SCHEV. The Ombudsman serves as a hands-on liaison for borrowers, cuts through red tape with servicers, and produces public reports that keep us honest about what’s working and what isn’t. Those protections were upheld and implemented, and they remain among the strongest in the country.
The need for a state-based solution is even more
urgent. If the federal government is edging out of the business of making
student loans workable, maybe it’s time Virginia edges back in. We don’t need
to recreate VELA exactly as it was in 1990’s. But we can revive the spirit of a
state-level partner that could once again help Virginians bridge the
affordability gap, this time with the added tools of refinancing, smarter
lending practices, and modern oversight.
While it may or may not be the right solution today, it’s certainly an idea
whose time could be coming back. And before any decisions are made, it’s worth
a broader conversation. I welcome feedback on whether reviving VELA or
something like it could be part of how we keep higher education affordable for
the next generation. An updated VELA with strong consumer protection and
measured financial tools can keep more talent here, grow our economy, and prove
again that when the federal pendulum swings, Virginia doesn’t have to swing
with it.