Borrowers burdened with student debt await decision on loan forgiveness
Millions of borrowers are awaiting the U.S. Supreme Court’s decision on President Joe Biden’s student loan forgiveness plan, and among them are 1.15 million Pennsylvanians who applied for debt cancellation.
In all, of the 40 million eligible borrowers nationwide, about 26 million applied or were automatically eligible for the onetime relief, according to the U.S. Department of Education.
The DOE has released a breakdown of federal student loan forgiveness applications by congressional district.
According to the data, of 1.15 million Pennsylvanians who applied, 743,000 applications were approved and sent to loan services.
In Pennsylvania’s 14th Congressional District, which includes Washington, Greene, and Fayette counties, 97,700 borrowers are eligible for student debt relief. Of those, 61,300 people applied or were automatically eligible for forgiveness, and 38,500 applications have been approved and sent to loan services for discharge.
The plan Biden announced last August would cancel $10,000 in federal student loan debt for those earning less than $125,000 or households with less than $250,000 in income. Pell Grant recipients, who typically come from lower-income households, would receive an additional $10,000 in debt forgiveness, for a total of $20,000.
Private loans are not included.
The Supreme Court recently heard two cases challenging Biden’s student loan forgiveness plan, but isn’t expected to release its final opinion until the end of June.
If the debt cancellation plan is struck down, Pennsylvania’s borrowers – whose federal student loan payments have been on pause since March 2020, when the coronavirus pandemic first hit the U.S. – will resume making their payments 60 days after the Supreme Court releases its final ruling, or 60 days after June 30, whichever comes first.
Interest on student loan balances will also start accruing at that point.
College costs have soared, outpacing the inflation rate. According to National Center for Education Statistics data, from 1980-81 to 2020-21, the cost of attending a four-year college in the U.S. has increased 173%, from $10,631 a year to $29,033 a year.
Among the groups that have called for federal student debt forgiveness is the Association of Pennsylvania State Colleges & University Faculties (APSCUF), which calls the nearly $1.75 trillion of student debt “a crisis that is preventing people from owning homes, getting married, and having children.”
Dr. Kenneth Mash, president of APSCUF and a professor at East Stroudsburg University, said last week he is hopeful the Supreme Court upholds the loan forgiveness plan.
“The burden of student loan debt is truly devastating and hurtful to students and to the broader economy. We hope this action is but a first step to deal with the student debt crisis,” said Mash. “Students should be able to have access to a college degree without having to mortgage their entire future.”
Student debt has impacted the long-term goals of Brian Kennedy, 29, of South Strabane Township. Kennedy earned his degree in political science from Penn West California University in 2018, and racked up $40,000 in debt – even after receiving scholarships.
Kennedy’s plan was to earn a bachelor’s degree and then attend law school or graduate school.
“But once I realized how much debt I actually accrued, and how long it would take for me to pay it off, it is not feasible for me to take on any more debt,” said Kennedy.
Kennedy’s student debt has forced him to set aside other life goals, including buying a home.
“Home ownership does not seem like an option for a long time for me,” he said.
If his student debt isn’t forgiven, Kennedy will resume a $408 per month payment for the next 20 years – while at the same time paying a car loan (last year, he bought a 2019 Ford Fiesta and paid more for it than the vehicle cost when it was new), rent, and other bills.
“It’s frustrating. You feel like you’re kind of stuck,” he said. “I likely will not be able to make more than the minimum payment on it. And if you make the minimum payment, you’re mostly paying the interest accumulating on that debt, it’s not going to the principal, so you’re not getting anywhere. It’s like a weight that’s constantly on your ankle.”
The average loan debt per borrower is $37,113, with the average public university student borrowing $30,030 to earn a bachelor’s degree.
Kennedy wasn’t oblivious to the cost of college, but saw a bachelor’s degree as the best path to getting a job he wanted and felt “societal pressure” to attend college.
Pennsylvania graduates carry some of the highest student loan debt in the country, APSCUF said. The average student loan debt for the graduating class of 2020 rose to $39,375, third highest in the nation. A full 64% of Pennsylvania college graduates had student loan debt in 2020.