To (Loan) Forgive and Forget
By Rachel Felice, Senior Manager
When I took out my first student loan a decade ago, I never doubted that I would be responsible for paying it back one day. I knew I would be responsible for all my loans as well as the parent PLUS loan my dad took out in his name because I had maxed out my federal allowance.
Knowing this, there was only one semester during college where I did not work. Otherwise, I was non-stop grinding away at schoolwork, internships and a variety of jobs that included anything from bartending and on-campus dining to sales for Coca-Cola and serving as a camp counselor. One semester I was working some days as a bartender from 6 p.m. – 6 a.m. and other days as an intern for a local radio station’s morning show from 5 a.m. to 10 a.m.
Unfortunately, not a single penny of what I made at the above jobs went toward paying off my student loans, which were quickly racking up thousands of dollars in interest. All my income went toward rent, bills, food and school supplies, with a small amount left for spending.
I graduated from Central Michigan University four and a half years later with more than $82,000 in student debt between federal student, parent PLUS and private loans. I have been consistently paying my debt for years because I have been lucky to establish a rewarding career using my degree, but I know this is not the case for everyone.
Last week, President Biden announced his “Student Loan Debt Plan” that will cancel $10,000 of federal student loan debt and up to $20,000 for Pell Grant recipients. While this gesture is certainly welcome, the reality is that it will not help all 43 million Americans with student debt. For most borrowers, $10,000 will not wipe out their student debt, and the loan forgiveness does not apply to parent PLUS or private loans.
College affordability will remain an issue for years to come despite loan forgiveness. Because of this, more students are rethinking the value of four-year degrees and opting for alternative paths after graduating high school. Between funding cuts to higher education and the rise of tuition and inflation, college is becoming increasingly difficult for families to afford.
On top of the cost of college education, interest rates are often debilitating and burden borrowers with thousands of additional dollars. It was not until student loan payments and interest rates were paused under the Cares Act during the pandemic that I started paying on my principal balance—nearly five years after graduating college.
Another factor negatively impacting the nation’s higher education crisis is, coincidentally, a lack of education. When I was in high school, college was pushed as my best option after graduation, but my family and I had little knowledge of the process, from applying to filling out FAFSA. Coupled with a lack of financial education and our understanding of how loans work, I dove headfirst into an unfamiliar pool. Recently, many states, including Michigan, have signed bills mandating financial literacy in high school curricula to better equip students with the knowledge they need to better manage their finances. Better late than never, I guess, but we must continue to introduce programs that simplify applying to and paying for college.
The nation’s higher education system is complex and there is no one solution to fixing years of disinvestment and poor practices. But what we do know is that loan forgiveness, while welcome and a step in the right direction, is not enough to support recent graduates, current students and generations to come. I hope my fellow borrowers join me in encouraging their elected officials to prioritize investing in long-term solutions to make college more affordable and accessible for all.