Student Loan Forgiveness: ‘Huge’ relief for Alabama students struggling to pay off debt and complete college

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Katie Candler still had a class to take at Jacksonville State University when she left school to care for a sick relative in 2020.

The pre-law major owed about $7,800 in federal loans at the time and planned to re-enroll when the pandemic subsided. In the meantime, she took a job as a team leader at Wendy’s and kept a spreadsheet of her expenses. The bills started taking 78% of his $400 paycheck. The rest, she said, was barely enough to get by — let alone pay off a loan for a degree she never got.

“I’m just kind of stuck in this cyclical cycle,” she said. “Like, I wanted to be a lawyer. I wanted to be a writer. I wanted to do so much, and now I’m working at Wendy’s trying to make ends meet.

Millions of Americans have student loan debt but no degree. And about 20 million Americans have less than $10,000 in federal student loan debt, like Candler, the White House says — and are now set to see their full loan balances cleared by a proposal from President Joe Biden.

Learn more about Ed Lab: Alabama plans to add new high school graduation requirement.

Biden’s proposal to offer $10,000 in student loan forgiveness, plus more for certain borrowers, will help about 629,000 Alabama residents, according to the Alabama Commission on Higher Education. The average Alabamian has about $37,000 in debt.

There was a lot of criticism, including from Senator Tommy Tuberville, who called the program “unfair” on Wednesday. And state education officials and college affordability advocates say more needs to be done over the long term to address systemic issues with college affordability and educational opportunity.

“Our state’s underinvestment in education was a political choice, and it made it harder for people to enroll and graduate,” said Chris Sanders of Arise Alabama. “It has also deepened racial and economic inequality by discouraging many people of color and low-income students from attending college.”

‘Good news’

As of March 2022, Alabamians held $23.5 billion in total student debt, according to ACHE. This included Direct Loans, Federal Home Education Loans, and Perkins Loans with outstanding balances. It is not yet clear whether Biden’s plan applies to FFEL or FFPL loans.

“Remission of student debt is certainly good news for many former students, and would be especially good for Alabama,” said ACHE Executive Director Jim Purcell. “Instead of making student loan repayments over many years, that money could flow into Alabama businesses for large-scale purchases, such as housing or transportation.”

Experts say figuring out how much debt is manageable for some is difficult and worry that application requirements and other parameters will make cancellation more cumbersome.

But the impact of all the reforms, they say, cannot be underestimated.

“This isn’t just a debt forgiveness announcement,” said Luke Herrine, an assistant professor at the University of Alabama School of Law who co-founded The Debt Collective. “This is the culmination of a large series of reforms to the student loan system that the Biden administration has implemented in ways that would have been totally unimaginable.

“We are now going to have a much more rational and relatively humane student loan system,” he added. “There are still all kinds of people who fall through the cracks and are abused by the system and I think it’s bad overall to have student debt, but it should be noted that it’s a big, big change.”

“Many of us feel the pain”

Tamarous Reynolds is still working to pay off about $65,000 in student loan debt from her undergraduate degree at Alabama A&M University. The 2006 graduate originally owed about $55,000 in loans, which earned $10,000 in interest over time.

Now Reynolds, who was a Pell Grant recipient, could be eligible for a $20,000 rebate.

“Of course, I would like to have a clean slate, but I also appreciate what’s in the bill,” she said. “Covering unpaid monthly interest is huge. This is largely where many of us feel the pain.

Highly indebted borrowers said they believed a crackdown on high interest rates would ease the burden considerably. Experts say low-level borrowers and high school dropouts, or students who haven’t finished college but still have relatively low debt, could benefit the most from the White House plan.

Nearly two-thirds of US student debt is held by women, and black borrowers are more negatively affected due to systemic racism, according to a recent study. Black women, in particular, may struggle to repay their loans due to well-researched pay equity gaps, even among high earners.

According to ACHE, about 315,000 Alabamians could afford to have their loans completely wiped out. In Alabama, 191,000 students owed up to $10,000 and 124,000 students owed between $10,000 and $20,000, according to the ACHE.

Javon Williams is one such student.

When she started her classes at the University of Alabama, the recent graduate took out two $5,000 loans to pay for the tuition increase. In her final two years, she was able to receive Pell grants and scholarships and no longer needed the loans, she said.

But a month into her first full-time job, she’s now saddled with $11,000 in student debt and monthly rent for an apartment that costs $1,400 a month plus car insurance and bills. utility bills.

“I just knew I was going to be in a hole when it came time for me to pay off my loans from November,” she said.

Eliminating that debt, Williams said, could help her buy a car and invest in a home as she begins to build a life after college.

“A Strategy in the State”

Chandra Scott at Alabama Possible says any amount of federal loan forgiveness would open many doors in Alabama, but the state can’t entirely rely on federal efforts if it wants to rehire borrowers like Candler who are trying to return to middle School.

Alabama Possible is one of many organizations working to get colleges to stop withholding transcripts from students who re-enroll but still have college debt. The practice, she said, is preventing dozens of adult learners from returning to college and could hamper statewide efforts to expand access to higher education for more Alabamians. aged.

“As a state, we cannot afford to depend on [federal] strategies,” Scott said. “We need to have a strategy in the state about how we support Alabamians who want to improve.”

Proponents agree that while the loan forgiveness is a “good first step”, there is still a lot of work to be done. Some say the state should fund all levels of education more generously and help reverse a historic decision to place more of the debt burden on students and families.

Dominique Baker, associate professor of educational policy and human development at Southern Methodist University, said Alabama’s strategy of increasing FAFSA completion rates is an example of a good forward-thinking approach to reduce barriers to university access.

But practices like withholding transcripts, she said, raise bigger questions about how colleges are funded and what roles institutions can play in developing policies that would address needs of students and families.

“How do we think about the flow of money that goes into institutions, especially public institutions, and what does that mean for the price of tuition charged to students, the amount of fees that we add? ” she says. “Are there ways we can reorient the way we try to think about higher education funding, so that we don’t push this on students and their families, and think about what it would really be like a public good of education funded by the state?

Rebecca Griesbach is a member of the Alabama Education Lab team at It is supported by a partnership with Report for America. Learn more here and help support the team here.

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John A. Bogar