Welcome, refugees. Now pay back your travel loans

In December 2016, as the family finally prepared to leave Egypt for the United States, Safieh signed a promissory note to repay a travel loan, offered by the International Organization for Migration on behalf of the State Department, which would cover their airline tickets.

"I was so happy I didn't pay attention to how much they would charge me," Safieh said in Arabic over the phone from Albany, New York, where she now lives. "I just wanted to leave."

About seven months later, Safieh started getting notices in the mail about paying back the $5,356 loan.

"I almost had a heart attack," she said.

For decades, the State Department has funded interest-free travel loans to refugees who, like Safieh, cannot afford the cost of relocating here. Six months after their arrival, borrowers are expected to start repaying the loans to one of nine private nonprofits, known as resettlement agencies, which are involved in helping refugees start their new lives here.

When refugees make their travel plans, they are assigned one of these resettlement agencies through the International Organization for Migration, which administers the travel loans.

The average loan per person is $1,100, and that amount can quickly increase when considering a full family. Meanwhile the resettlement agencies, including World Relief, the U.S. Conference of Catholic Bishops and the International Rescue Committee, all of which collect the travel loan payments but have nothing to do with granting them to begin with, retain up to 25 percent of the total payments.

According to the most recent data from the State Department, in 2017, refugees made over $66 million in loan repayments. Of that amount, a bit over $14 million went to the resettlement agencies.

Some advocates think that these agencies should not be taking money from those they are trying to help. The nonprofits involved claim that these fees go toward their administration costs and programming, all of which is focused on giving refugees long-term financial security.

After coming to Rochester, New York, from Kenya, Sadiya Omar, 52, is finally enjoying some stability. She immigrated in 2002 with her three children, following a decade of living in a Somali refugee camp. Her travel loan was more than $3,000. Repaying it became a four-year ordeal.

"I worked two low-paid jobs, seven days a week," said Omar, whose monthly payments of $70 came on top of bills, rent, child-care costs and the money she wired to her parents back in Kenya.

Today, Omar's children are almost done with college. She is now vice-president and co-founder of Refugees Helping Refugees, a Rochester-based nonprofit that, among other services, helps Western New York refugees renegotiate the terms of their loans with billing agencies.

"I spoke English before I came here, which is why I was able to get a job after two months," she recalled. Omar said that those who have to learn the language often struggle to find work in time for their first repayment.

This is what happened to Baydaa Majeed. Her family had relocated from Baghdad to Brooklyn in late 2015. When the newcomers were asked to start repaying their loan of almost $5,800, they were all still unemployed.

"It was really stressful," said Majeed, a college graduate who, because of the language barrier, had failed to land even entry-level positions in retail.

The Majeeds were granted a three-month deferral of payments, but when the bills started coming again at the end of that period, Majeed and her relatives still hadn't found work. Eventually, the family heard of an initiative by the Arab-American Family Support Center, a New York-based nonprofit, which would ultimately settle their debt.

Incommensurable stress

Rawaa Nancy Albilal, president and chief executive of the Support Center, said that travel loans put refugee families under incommensurable stress. She questions whether resettlement agencies should be taking a commission on repayments, as the practice, she said, "defeats the purpose of their mission."

Eskinder Negash, president and chief executive of the U.S. Committee for Refugees and Immigrants, the agency assigned to collect payments from both Safieh and the Majeeds, argues that the fee is fair; if the State Department requires refugees to pay back their loans, his nonprofit should be allowed to recoup its costs, which include paying three full-time employees who coordinate the repayments.

"The question is whether we should charge refugees for their transportation to begin with," Negash said.

According to a spokeswoman for the State Department, which, it must be said, takes a loss in the travel loan transactions, having refugees pay for their travel expenses helps defray resettlement costs and can strengthen the newcomers' resolve for a successful migration.

The department maintains that the loans are designed to encourage repayments without placing undue hardship on refugees, as interest-free deferments and reduced monthly payments are easily granted to struggling debtors. In the process, newcomers are given an opportunity to become financially literate and build up their credit history.

The opposite is also true, however, as missed payments can affect credit scores.

To date, slightly over 18 percent of all the loans issued to refugees in 2016 did not receive a single payment, according to data from the State Department. These missed payments were reported to credit agencies. For a while, Safieh, who ultimately found a part-time job as an Arabic teacher, was nearly $800 behind on loan payments. She still needs to repay over $3,500.

"When you don't have much, it's hard to pay for anything," Safieh said. "Frankly, I don't know what to do."