Education

Student debt relief plan draws mixed reaction, as proponents argue it’s necessary step to address growing problem

It took more than a decade, but the movement to cancel student debt saw progress last Wednesday with the passage of a three-part plan meant to deliver on Democratic campaign promises for relief. 

The move has been both lauded and heavily criticized by North Forkers, with some highlighting the much needed aid it will provide to borrowers and others questioning why their tax dollars are covering individual loans.

“I think what matters is that there’s recognition that there is a problem,” said Mike Gagen, a 2010 Mattituck High School graduate. He majored in political science at King’s College in Pennsylvania, where he graduated in 2014. By the time he graduated, around $77,000 in loans had accrued into $109,000 from interest. 

“I think the $10,000 [forgiveness] is more pointing out there is an issue we have to fix,” he added. “It helps, but it doesn’t do much, in terms of a bigger loan.”

More than 45 million borrowers owe $1.6 trillion in federal student loan debt, a deficit fueled by tuition costs that have nearly tripled since 1980, according to the White House. Pell Grants, which once covered nearly 80% of a public college degree for working class students, now cover just a third of costs. 

Under the new policy, the Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the department and up to $10,000 for non-Pell Grant recipients.

Borrowers must have an income less than $125,000, or $250,000 for married couples, in order to qualify for relief. The pause on federal student loan repayment will be extended through December 31, with payments resuming in January 2023. 

Borrowers with original loan balances of $12,000 or less would see loan forgiveness after 10 years of payments instead of 20, and loan balance will not grow due to unpaid interest so long as borrowers make their monthly payments. 

The policy isn’t just about forgiveness, pointed out Tiffany Graham, a faculty member and administrator at Touro Law Center. She emphasized she was speaking as an individual, not for the law school. She noted she will finish paying her loans within the year, and doesn’t qualify for relief from this policy.

“There are aspects of the policy that are looking toward the future and that’s exactly the conversation that needs to be had, and the kind of long term solutions that we need to be thinking about,” she said. “There are other ancillary policies that I believe were already in place regarding schools that committed fraud in the way that they attracted student loan borrowers in the first place, et cetera. All of that, wonderful. Fantastic. That’s the kind of thing we want to see happening on a long-term basis, but as far as the people who are experiencing burdens now, I think that it’s perfectly appropriate for the government to say, ‘You are suffering, you are our people, we are going to step in and help you too.’” 

Other policies include a new income-driven repayment plan that caps monthly payments for undergraduate loans at 5% of a borrower’s discretionary income, which is half the rate most pay now. No borrower earning under 225% of the federal poverty level, equivalent to around $15 per hour on an annual basis, would need to make monthly payments. 

Mr. Gagen paid off his loans last November, thanks to the help of a life insurance policy when his father passed away and years of budgeting, help from others and “working 60 plus hours” at second or third jobs on top of a salaried position. He doesn’t qualify for the forgiveness program. But he said it would have made a difference when he did — more money could have gone toward car payments or rent, for instance. 

“I think that it is long overdue, that there was some help given. I don’t think there’s a right answer on the amount, on what could be done, what should be done. But I do think that someone needed to show that there was an issue and I hope that the $10,000 that people would be getting at some point or another can help them make decisions that they want to make, and not make decisions they’re forced to kind of make, like I was,” he said. 

Shannon Quinn of Southold graduated from SUNY New Paltz with a B.S. degree in marketing and management in 2018. She has been working for Melville based Cona Elder Law for the past three years.

“I did pay for whatever I could while there, but as most students do, I had to take out a loan,” Ms. Quinn said. “If I receive this new funding (10K) it would cover like 40+% of my debt.”

Not everyone, however, believes the policy is beneficial. Many criticized the relief program in more than 200 comments posted in response to a reporter seeking feedback in a North Fork Facebook group. 

“The student loan forgiveness program is another socialist program engineered by the Democrats in order to bribe young people to vote for their failed agenda. ‘Forgiveness’ of loans simply transfers the obligation to the taxpayers who never signed up for the loan,” a Facebook user commented. “And yes, I took out student loans and worked in order to pay them off in full.”

“My husband and I BOTH worked to put aside money for our son’s college. He went to a state school, chose to live home and commute for a good part of his college to avoid incurring debt above and beyond that we had budgeted for school. He graduated debt free. What stupid hacks we were,” someone else wrote. 

Others defended the policy in the comments. Some argued the hypocrisy of supporting other loan forgiveness programs but not student debt relief.

“No one complained when small companies received bailouts during Covid and many of them were financially secure without the newfound money,” one person said. 

“I paid off 58k on my nursing school loans, took 20 years! 25 years later I helped my kids at SUNY schools (70k) in loans, SOLD my home to do this. My youngest has 15k in grad school loans (spec ed teacher) — 10k will be a huge help to her. Why are people not willing to help the working class?” said another person. 

The application process for forgiveness has not officially opened yet. The federal student aid website says more details will be announced in the coming weeks and directs users to a Department of Education subscription page to receive notifications on updates.

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