By Madhu Mayer
While some are apprehensive, many local college graduates are applauding President Joe Biden’s administration for offering student loan relief.
Over the past several days since it was announced that many student loans would be forgiven, there’s been a lot of discussion about that decision, locally it’s not been any different. Biden signed an executive order last week that will forgive up to $20,000 in college loans. With the hope it will ease some of the financial burden.
In a statement from www.wh.gov, Biden said, “a post-high school education should be a ticket to a middle-class life, but for too many, the cost of borrowing for college is a lifelong burden that deprives them of that opportunity.”
“During the campaign, he promised to provide student debt relief.” The statement went on to say that the Biden Administration is” following through on that promise and providing families breathing room as they prepare to start re-paying loans after the economic crisis brought on by the pandemic.”
The total cost of both four-year public and private universities has nearly tripled since 1980. Pell grants once covered nearly 80 percent of the cost for a four-year public college degree for students from working families. But the statement said that the percentage has fallen to a third. According to a Department of Education analysis, a typical undergraduate student with loans now graduates with nearly $25,000 in debt.
For Manny Flores of Romeoville, his engineering degree from the University of Illinois-Champaign has left him with nearly $78,000 in debt.
“I have been working for several years in my field, and I did repay some of my loans,” he said. “This loan relief will go a long way in helping me because I thought owning a house was something I could never do. Others around my age are struggling to repay our loans because it is so high. People forget that I may have a good paying job, but I have to pay for rent, car payment and my student loans. This at least helps me.”
Jennifer Simkin of Joliet said she was hoping for her entire loan to be forgiven.
“That would have really helped me because my student loans are nearly six figures,” said Simkin, who has a master of statistics degree. “Coming out of college owing hundreds and thousands of dollars in loans made me think if higher education was even worth it. Being in debt is not fun at all, especially when you are 27 years old.”
Ken Matuszek of Shorewood, who didn’t go to college, offered a different perspective. Unlike his friends who went to college, Matuszek said he started working right after high school.
“I joined a carpenter’s union and eventually found a good job,” he said. “This allowed me to raise a family and send my two kids to college.”
But Matuszek asked where his reward is for repaying his children’s college loans.
“This is not right,” he said. “How about the millions of people who have repaid their loans without any relief. Is Biden going to give them something for doing the right thing? Anyone who goes to college understands that if they take out a loan, you have to pay it back.”
Matuszek’s concern is that debt forgiveness will eventually hurt the economy.
“Economists have been saying this will further elevate our inflation numbers,” he said. “In the long run, this is going to hurt this country. Remember, someone has to pay for this because college debt relief just does not magically disappear. This forgiveness is going on the backs of waitresses, construction workers and other blue-collar employees who never went to college.”
But higher inflation may not be the outcome, according to some financial experts, the amount of debt forgiven may be large, but the debt relief is not likely to cause a drastic shift in spending patterns. Long term, a reduction in student loan debt could help with the startup of small businesses and households, as well as spur an increase in homeownership.
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 in debt cancellation to non-Pell grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for married couples. To ensure a smooth transition to repayment and prevent unnecessary defaults, the pause on federal student loan repayment has been extended through Dec. 31.
Madhu Mayer, TTW Reporter – mm@thetimesweekly.com
This is very informative