Update (2/23/24): Pennsylvania borrowers will see $45.1 million in student debt forgiveness under a new program for which processing begins today, the U.S. Department of Education announced.
The latest change in the Saving on a Valuable Education [SAVE] Plan will wipe out a total of $1.2 billion in federal education loan debt owed by 153,000 borrowers, including 5,600 in Pennsylvania.
The forgiveness applies only to borrowers who:
- Signed up for the SAVE Plan for lowering monthly student debt payments
- Have been making payments for at least 10 years on original federal student debt balances of $12,000 or less
- Or who are signed up for SAVE and whose debt principals were initially higher but have been making payments for longer periods.
Other than signing up for SAVE, borrowers don’t need to take action to receive the forgiveness, according to the department’s press release.
Resumed student loan bills putting the squeeze on Pittsburgh-area households
Reported 2/12/24: When tuition reared its ugly head earlier in her life, Alexandra Mosser opted to take out private loans in addition to federal loans — a decision she now calls a “mistake.” Her parents’ income was just high enough to disqualify her for scholarships and aid, she said. And though they helped her financially through school, she still needed loans.
After obtaining psychology degrees through undergraduate studies at La Roche University and grad school at Chatham University, the 39-year-old Monroeville resident now works in behavioral health — and has more than $200,000 in student debt. Private loans only take up about a quarter of that, but their lofty interest rates mean much higher repayments. Her monthly payments, about $760 for private loans and $134 for federal loans, exceed her monthly mortgage expenses.
Without student debt, “I would have significantly less credit card debt, honestly. … We have a dog, also, that has some health issues. … And that thousand dollars a month would make it so that I could even save money,” Mosser said. “I don’t have a savings right now.”
After taking a break from paying her federal loans during the pandemic-era pause on payments, Mosser resumed payments in the fall under more lenient terms set out by the federal government. It shaves about $100 from her federal loan’s monthly payment, but doesn’t help her private loans.
“A hundred dollars adds up in the month, but at the same time, because of interest rates, several things have gone up since then,” Mosser said. “My mortgage payment has gone up, and even my private loan payment has gone up because of interest.”
Student loan repayments resumed in October, with new programs on offer from the federal government to decrease monthly payments and forgive portions of debt. But many, including borrowers with private loan debt and those stalled in the application process for government aid, feel they are still drowning.
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Federal relief, who benefits?
The federal government paused public student loan payments and interest at the start of the COVID-19 pandemic in March 2020. Its new income-driven repayment plan requires borrowers to pay only 5% of their monthly discretionary income, instead of 10%; more generously defines non-discretionary income; totally forgives debt on balances of $12,000 or less after 10 years of payments and covers any unpaid monthly interest, according to the Federal Student Aid website. Those who make less than 225% of the federal poverty level do not have to make a monthly payment.
About 64% of college graduates in Pennsylvania had student loan debt in 2020, the third highest of all states, according to a report from The Institute for College Access and Success. Pennsylvania graduates have, on average, $39,375 in student loan debt, and 22% of graduates have private student loan debt, according to the report.
Many in the Pittsburgh area struggle with student loan debt, according to Miracle Jones, director of policy and advocacy for 1Hood Media, a North Oakland-based activist group with a focus on racial justice. Jones hasn’t seen much success for local residents applying for Biden administration repayment subsidies and relief, she said. Because the repayment plans and forgiveness programs are not automatic for those that qualify, for some they require extensive research and rigorous applications..
“There are people who are qualified to get all of their student loan debt taken away, cleared off the record, but then they had to apply for it,” Jones said. “Despite knowing what institution it was, despite having people’s Social Security numbers, their application numbers … people still had to do these second, third and fourth steps to get their credit score updated to make sure they qualified.”
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Jones said student loan debt is intertwined with low wages in Western Pennsylvania, something that disproportionately affects Black residents and, in particular, Black women. And, when push comes to shove, many economically struggling residents will prioritize immediate needs such as housing before chipping away at student debt, she said.
“These stagnant wages, these wages that are not comparative to other regions, are also going to be a driving factor in people leaving Pennsylvania, because they need to be able to live,” Jones said. “They need to be able to pull in a salary that allows them to actually enjoy life and not just work and pay the bills.”
‘I don’t want to die with student debt’
Clearing large amounts of student loan debt takes a combination of discipline, time and money.
In September 2021, John Herington finished paying off $118,000 of student debt, in addition to tens of thousands in other debt. Inspired by popular personal finance guides, Herington, a corporate trainer, took a hard look at his budget and allotted as much money as possible to student loan payments. This meant regularly paying $2,500 to $3,500 and, when bonuses came in from work, as much as $9,500 a month.
When the Biden administration was attempting more ambitious debt forgiveness programs, Herington requested and received a government check of more than $35,000 – the amount he’d paid down since the emergency declaration of 2020. But he ended up paying that back when the Supreme Court struck down the president’s rollout last summer. If he’d spent that money on the assumption his debts would be canceled, he noted he’d now be considerably worse off.
“As upset as I was, at the end of the day, I did sign documents when I was 18, 19, 20, saying I would pay this stuff back. Not understanding it, but I did say it,” Herington said. “So I owned up to it.”
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Around the time he accomplished paying off his debt, Herington, 47, of Baldwin Borough, started a side-gig offering financial counseling for people. All of his clients have student debt, he said — typically at least $30,000.
“It’s one of the biggest,” he said. “The mortgage, which is typically higher, isn’t as much of a burden for them. … The student loan debt is very much a stressor for them.”
Some of Herington’s clients are so anxious to clear their student debt they see the prospect of bankruptcy as a relief, even though, he warns, that wouldn’t necessarily eliminate their obligations.
For some still struggling to pay back student loan debt, the federal government’s income-driven repayment option doesn’t offer any relief. Julie Melissa owes more than $30,000, and because her income has recently risen, the plan would increase her monthly payment by about $400 she said.
Melissa, a 48-year-old Harmony resident with two children, a foster child and a semi-retired husband, often picks up dozens of hours a week of overtime work for her job in behavioral health. After handling groceries, health insurance and the mortgage, she puts about $500 a month into her loans — a little more than required.
“I don’t want to die with student loan debt,” Melissa said.
Despite her long hours and substantial financial obligations, Melissa stays positive. She pushes herself to do anything she can do to make things better, she said.
“And if that means working a lot, that’s what I’m gonna do,” she said. “I can’t live in that world where I’m surrounded by negativity, because if that happens, then the people that I love, the people in my house, they won’t survive, because I’m the strongest person there. I can’t be the weak link.”
Matt Petras is an independent writer and adjunct professor based in the Pittsburgh area. He can be reached at matt456p@gmail.com.
This story was fact-checked by Jamie Wiggan.
