The Case for Student Loan Forgiveness

So, today I will do something that is probably absolutely nuts. Something that I would have never done 10 or 15 years ago. I will reveal the full balance of my student loan debt. And what is that balance exactly? As of today, it is $200,337.10. Yep. That debt was incurred in the pursuit of 3 degrees and at 5 different institutions of higher learning. Years ago, especially as a college dropout who had no degree, I was incredibly ashamed of my student loan debt. I would not open the mail that came from loan servicers. I went into default. I had garnishments threatened. Oh it was bad. But I was able to rehabilitate my loan; re-enroll in school (and to be honest, I had a little nest egg of cash due to insurance payouts from a car accident that I was in — without that, I probably wouldn’t have bothered); go on to get my bachelor’s and then my master’s degree.

At every step, I incurred more debt. But since I was successfully progressing through school, I was able to face dealing with it. I consolidated all of my loans. I put them into an income-driven repayment plan. And even though (at the time) I would be looking at a big tax bill against the forgiven balance after 20 years, that would still be an awesome gift, right? I mean I borrowed this money. I knew that I would need to pay it back.

So for many years I just bit my tongue and full balance of my loans just floated around over me like a cloud. I say a cloud, because thankfully, due to the income-based monthly payment amount, it wasn’t a struggle to pay these loans. But then COVID came, and just changed everything.

So when the pandemic hit, pretty quickly, (federal) student loan payments were suspended. To me, this was a nice bonus. Like I said, my loan payment was not crazy, so I appreciated the extra dollars – but it wasn’t like a hardship was lifted. However, more and more talk was coming out of Washington to cancel student loans all together. Whoa. So there is a big push for this? I thought this problem was just for poor kids (like myself) where our parents could contribute $0 to our college expenses. Do you want to know why my college debt is so high? Well basically, I borrowed to pay for not only tuition & fees; but for rent, for food, for living expenses, for travel (and when I say ‘travel’ I don’t mean spring break trips to Cancun, I mean just travel to home for holidays), and medical expenses. It took me 10 years to complete my bachelor’s degree. And every year, I borrowed the most that I could. Not because I was being irresponsible. But because if anything happened as far as financial needs during the course of the year, my family would not be able to help me. I would need to drop out (which actually happened – twice).

The reality is that the problem is not just one that effects low-income students (although they are disproportionally effected overall). It is one that has been created as an aftershock from decades of the low prioritization that both the federal and state governments have placed higher education into. While it is debated if a college degree is even necessary for success, the fact of the matter remains that school guidance counselors heavily promote college enrollment. Especially to good students in economically distressed/disadvantaged situations where they are told over and over again that the college degree will be their ticket out of poverty.

So excuse the hell out of me for drinking the Kool-Aid.

Trust me, I do not regret going to college. In fact, it is one of the best decisions I have ever made. With that being said, the college landscape is not a friendly one for low-income students; or even minority students of any economic background. But that does not lessen the fact that the state of higher education in the United States is ripe for reform. Here is why:

1. There is serious inequity from state to state in how much they fund higher education

I graduated high school in Pennsylvania – one of these worst states when in comes to college student indebtedness. Why does this happen? Well, currently, Pennsylvania offers little in terms of financial aid from the state to its graduating seniors. The maximum need-based grant averages around $4,000 if you remain in the state. When I was in college, you could only be awarded $600 per year if you went to an out of state school. It is unclear to me if you can get anything from PHEAA

From the St. Louse Post Dispatch

Another thing that is unfortunate for Pennsylvania students is that there is this strange categorization of colleges here. The big name, research universities like Pitt, Temple and even Penn State are actually not fully ‘public’ institutions. They are ‘state-related’ institutions. For a PA resident, annual tuition alone at these schools averages out to be about $18,000/year. No compare this to Florida, where the amount of in-state tuition at the University of Florida is $6,380. Yep, almost 1/3 of the cost of Pennsylvania universities. Also, they have the Florida Bright Futures Scholarship, where if you graduate from a Florida HS with a 3.5 GPA (or higher), then your tuition at state universities is waived.

But it is not just the states at fault here.

2. The Pell Grant is Just an Embarrassment

The Pell Grant comes from the Federal Government (administered by the states) to help assist students with exceptional financial need to go to college. The maximum Pell Grant is currently $6,495 (so enough to cover your tuition at University of Florida at least). However in order to qualify for that (maximum) amount, you family’s household income needs to be less than $30,000.

To put things in perspective to show how poor I was growing up, I always qualified for the maximum Pell Grant award.

In spite of the argument that increasing the amount of the Pell Grant will cause college prices to go up, you can’t help but admit that in its current state, the grant is failing at its primary purpose; and that is to help enable low to moderate income students obtain a college degree.

3. Colleges Excel at Marketing More Than Contributing to the Economic Mobility of their Graduates

You would think that colleges care about the eventual success of the people who graduate carrying their degrees. And in general, they do. I mean, if too many people who attend a particular institution take out federal student loans to attend it; and then later default on said loans, then then the institution can be penalized by the US Department of Education, and lose their eligibility to receive aid in the future. Plus, being that these statistics are public — it just looks bad.

With that being said, once you graduate, the college pretty much got what they wanted out of you. Sure, you could become one of those few alumni that gift the university with hundreds of thousands of dollars. But chances are, the vast majority of alumni will never donate anywhere close to what they paid in tuition. So as long as you are out there, self-sufficient and paying your bills, what do they ultimately care in regards to what your average bank account balance is?

And that approach just sucks. I mean take college career centers for example – which do not have a good reputation. Whenever I went to mine, they mainly posted summer jobs and part-time work that was currently available to students. Sure they had on-campus job fairs – but just like job fairs in the non-academic world, you mainly just exchange copies of your resume for pens and that is the end of that. The only on-campus career tools that really worked were co-op and internship opportunities. And quite frankly, I could never take advantage of those because I could make more money working as a server at night than I could during those opportunities. And sure, hindsight is 20/20 – and I would have done so much better with even an unpaid internship under my belt. But then how would I have paid for my car insurance during that time? Ah of course, more student loans!

requiring unnecessary degrees drives more students to attend college, often taking on large amounts of debt in the process, because they’ve been told they can’t afford not to.The Roosevelt Institute

But let’s not dump on the blame on one department of a college – or even a particular college in general. Because the truth is that a college degree is not the golden ticket to the American dream and it does not close the gap in economic inequality like you think it would. The short and sweet of it is this: It is not always what you know, but who you know. And if colleges really cared about the eventual success of their graduates, then they would pay more than lip service to alumni networking and give all students insider access to various professional networks — especially to BIPOC students in particular, who have the most to gain from such access.

4. Student Loan Forgiveness Already Exists (In Theory)

There already are several programs out there through which you can have your student loans forgiven. The problem is that they definitely do not make it easy. I work for a non-profit entity and have a plan to eventually apply for PSLF to wipe away my student loan debt. I have hope, in spite of the woefully low approval rates of the program.

Even if you don’t work in public service, the current income-based repayment plans stipulate that after 20 or 25 years (depending on the plan), your remaining student loan balance is forgiven. The caveat there is that the remaining balance is taxable as income. But efforts from the current administration may change this.

So at the end of the day, this isn’t just about whiny Generation Xers and Millennials feeling entitled and wanting to get free college degrees like chicken on toothpicks in a mall food court. This is about shared accountability. It is not our fault that they cost of college has shot up 5 times the amount of inflation. It is not our fault that the standard financial aid package available to low and moderate income students covers less and less of the overall cost of college each year. Maybe this painful process will be what it takes for us to wake up and re-prioritize what higher education should be all about and what it should accomplish. Maybe.