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A’Naiya Vavis graduated from Texas State University four years ago with $14,000 in student loan debt, and her $180 monthly payment to the federal government meant living paycheck to paycheck on a $38,000-a-year public relations salary in Austin.
When her loan payment plan was paused during the pandemic, it allowed her enough breathing room to afford rising gas and food prices.
But on Wednesday, she found out her education bill is no more after President Joe Biden announced that the federal government will forgive $20,000 in student loan debt for borrowers who also received federal Pell Grants.
“I’m very stunned and shocked,” Vavis said Wednesday. “I didn’t expect to not have any student debt until at least my 30s just because of where I live and the high cost of living. Trying to budget for student loans has always been stressful. And now to have that off my plate is a big relief.”
Biden’s student loan forgiveness plan comes after months of debate. Individuals earning $125,000 or less will see $20,000 in student loan debt erased from their education bill if they used federal Pell Grants to pay for it. Those who did not use those federal grants will have $10,000 eliminated from their student loan debt. The loan forgiveness applies to borrowers regardless of whether they earned degrees.
In 2021, 56% of students who graduated from four-year public universities had approximately $25,000 in student debt, according to the Texas Higher Education Coordinating Board.
“Extending higher levels of forgiveness to Pell recipients is a great addition to this plan,” said Aurora Harris, the Southern regional director for Young Invincibles, a national youth organization. “This especially helps Black students, [who] have the highest percentage of students, 72%, who receive Pell Grants. With this increased forgiveness, it is estimated that 20 million borrowers will have all of their remaining loan balance wiped out.”
This marks the first time in U.S. history that a president has issued a widespread forgiveness of student debt. The move has received criticism from both sides of the political spectrum. Democrats have argued Biden should forgive a larger amount of student debt while Republicans argue that forgiving debt will increase inflation and oppose any cancellation to high-income earners.
The Biden administration argues it has the legal authority to forgive student debt based on the Higher Education Relief Opportunities for Students Act of 2003, but higher education experts said there are likely to be lawsuits filed questioning the executive branch’s authority.
Biden also extended the COVID-19 pandemic pause on loan payments one more time, through the end of 2022.
For students who are carrying more debt than the cap announced Wednesday, there are mixed feelings.
Austin resident Kalyn Williams has around $60,000 in student debt from her undergraduate and graduate degrees, which she has been paying off through the federal income-based repayment plan. She owes approximately $10,000 more now because her monthly payments don’t cover the cost of interest that accrues on the loans. This move puts her right back to where she was when she finished her master’s degree a decade ago.
“I’m happy, but I also wish it had been more because everything that he campaigned on was, you know, forgiving loans for folks who had gone to public schools, which I did,” she said. “And so this is just kind of like, great, but not really what we were expecting.”
Williams has 13 months until she qualifies for public-service loan forgiveness, the program that forgives the remaining balance after 120 qualifying monthly payments.
As part of Wednesday’s announcement, Biden is also proposing changes to the income-repayment plan, including a reduction — from 10% to 5% — in the amount borrowers pay each month. The new plan would also forgive loan balances after 10 years of payments instead of the current 20 years for those who have a balance of $12,000 or less.
For Williams, it’s unclear how that change would impact her last year of student loan payments since her income has risen during the pandemic.
Stephanie Borden, who lives in Carrollton, has around $57,000 left to pay off on her student debt. She said she appreciates any help to cut down the debt and hopes the forgiveness will reduce her $400 monthly payment. She didn’t realize how much it impacted her life until she was able to pause the payments during the pandemic.
“Four hundred dollars is a lot of money and realizing not paying it, I don’t have to live paycheck to paycheck. I can afford to do this fun thing with my friend, I can afford this thing I need that I’ve been putting off for years,” she said.
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