Student loan changes free some graduates, others keep heavy burdens

When the government suspended federal student loan payments at the start of the COVID-19 pandemic, it changed Cody Fulton’s life.

With monthly payments of $300 for his private loans and $600 for his federal loans, saving money had proven difficult. Being free of that $600 monthly payment allowed Fulton to make a big purchase.

“In just under a year and a half, after taking those federal student loan payments off my plate and not paying them, I was able to buy a house,” Fulton said. “And, man, that’s crazy.”

Now the 34-year-old Brookline resident expects $20,000 of his roughly $100,000 student loan debt to be relieved, following President Joe Biden’s announcement of a student debt relief initiative. It will help, but what excites him most is a provision in the initiative that caps undergraduate loan payments at 5% of discretionary income. It inspired him to consider a potential career change several years later, from his current field of information technology to working in public history – his deepest passion – perhaps at a museum.

“I have always been a big fan of history and the importance [of what] history tells us for the future,” Fulton said. “And I think it’s really important for the public to know that as well and share my love for the story. It’s something I’ve always wanted to do.”

Others who are drowning in student loan debt won’t get much help – and some will get nothing. Biden’s student loan forgiveness program will bring substantial relief to millions of people, but do little or nothing for millions more who are suffering from the burden of their student loans. For some, the move only raises more questions about a higher education system that trades its benefits for huge debt.

Refinanced debt devours a salary

Kaleigh Mauroni graduated from college with a degree in linguistics, a subject she loved but which did not lead to a job in that field. She refinanced her student loan debt with NaviRefi, a refinance program offered by student loan service Navient, to help control monthly payments and interest rates. She now has about $65,000 in private loans, with monthly payments of about $900.

“That’s almost all of one of my paychecks a month,” said Mauroni, who gets paid every two weeks.

The 26-year-old West Mifflin resident continues to repay the loans, working as a paralegal. Looking back, she finds the process of applying for a loan and selecting payment plans confusing and wonders if college was worth it.

“I clearly don’t do anything related to my degree, but if you don’t have a college degree – which my husband doesn’t – it’s really hard to get a job that pays more than $10 off the job. hour, regardless of whether or not your academic degree will actually qualify you,” Mauroni said.

Biden’s plan does not affect Mauroni’s private loans; it only returns money from loans made by the federal government. Also, last week the administration updated the plan so that loans guaranteed by the federal government but held by private lenders are not eligible for forgiveness.

Kaleigh Mauroni sits outside the Cathedral of Learning on the University of Pittsburgh campus where she attended school. “That’s almost all of one of my paychecks a month,” she said of paying off her student debt. (Photo by Benjamin Brady/PublicSource)

Nonetheless, Biden’s initiative will cancel $10,000 in federal student loans or $20,000 for Pell Grant recipients, for people earning less than $125,000. This will benefit 43 million people and completely cancel the debt of around 20 million, according to the White House fact sheet touting the plan. A series of included adjustments to the repayment policy will also be more lenient for borrowers, and the pause on monthly federal loan payments will end early next year.

In Pennsylvania, about 1,717,300 borrowers are eligible for debt relief, of which about 988,800 are Pell Grant recipients, according to a press release from the United States Department of Education.

More than 2 million Pennsylvania residents have student loan debt, according to a September report from the Keystone Research Center and the PA Budget and Policy Center. Residents of Pennsylvania graduated with an average student debt of $39,375 in 2020. The amount of student debt in the state is growing rapidly, currently reaching $76 billion, four times the 2003 total adjusted for inflation, according to the report.

All or nothing?

Najeeb Shafiq, an education economist and professor at the University of Pittsburgh, sees the Biden plan as a smart compromise in the sea of ​​different perspectives offered by economists and politicians from all political walks of life, ranging from no forgiveness to full forgiveness.

“One is you’re doing nothing, and the other is you’re doing a lot, which is going to be very expensive, so what’s the middle ground?” Shafiq said. “And I think the common ground here was to design it in a way that was as fair as possible and at the same time costly but not as costly as the extreme of forgiving everybody’s loans.”

The plan has been criticized by the right as unfair, unnecessary and potentially illegal. There has been some debate about the cost this will end up costing the federal government in lost revenue. White House spokeswoman Karine Jean-Pierre told CNN end of August that it will cost $240 billion, but a month later a Congressional Budget Office report estimated that the cost will be $400 billion. Last week, six elected Republicans from six states sued to stop the planclaiming that he exceeds the authority of the president.

Meanwhile, the left sees the move as insufficient, with progressive Democrats such as Massachusetts Sen. Elizabeth Warren pushing a map for $50,000 in relief for any federal borrower, regardless of income. Vermont Senator Bernie Sanders called for a total cancellation private and federal student loan debt.

Shafiq acknowledges it will help those in difficulty and believes it has the potential to stimulate the economy as newly freed people buy homes and make other major purchases. He also thinks it’s fair to say it’s unfair to those who have decided not to go to college.

It’s been a long time since I thought I’d have children because of this debt… It’s really time.

Tracy BATON, social worker and community organizer

“I think there’s considerable resentment on their part about, ‘OK, so if you give this pretty large amount to college graduates, who we perceive as elites, are you giving us anything? “, Shafiq said.

Despite criticism and concerns, the plan sounds good, with 51% supporting against 39% opposing, according to a joint survey by The Economist and YouGov.

The human impact

Tracy Baton, a 59-year-old social worker and community organizer, has more than $100,000 in federal student loans after an undergraduate degree and several master’s degrees from higher education.

Tracy Baton stands on the median between the two lanes of East Liberty Boulevard. Before the break, she had about $500 in monthly student loan payments. (Photo by Lily Kubit/PublicSource)

Before the break, she had around $500 in monthly loan payments. Because of the Biden plan’s more generous reimbursement policies, she expects that to drop by perhaps $100. And because she works for a non-profit organization, her debt will be fully forgiven after 10 years of payments.

This would not be a life-changing benefit, but certainly a significant benefit – a common benefit for recipients of assistance from this plan.

“I notice every dollar. … A hundred dollars a month is a lot of money,” Baton said. “Anyone who thinks it doesn’t doesn’t understand money. That’s more than my auto insurance.

The break in federal student loan repayments helped Taylor Stessney buy a home in Swissvale, which she moved into about a year ago with her partner. She expects $20,000 in debt to be relieved by Biden’s plan, but that will still leave her with about $85,000, about half of that in private loans.

Taylor Stessney stands in front of a mural at Roslyn Station near the Martin Luther King Jr. East bus lane in Swissvale. “It’s been a long time since I really thought I would have children because of this debt.” (Photo by Lily Kubit/PublicSource)

Stessney, a 30-year-old labor organizer for Restaurant Opportunities Center United, still has $500 monthly payments for her private loans and will again receive additional federal payments once repayment resumes, making it difficult to save again. . This problem makes long-term decision making difficult.

“For a long time, I really didn’t think I would have children because of this debt. … It’s really about timing,” Stessney said. “The amount of debt I have, I can’t afford a kid right now, and I don’t know what it will be like in five years.”

Matt Petras is a freelance writer and educator based in the Pittsburgh area. He can be reached at [email protected] or on Twitter @mattApetras.

This story has been verified by Aavin Mangalmurti.

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