ASHLAND — President Joe Biden announced in August the federal government plans to forgive $10,000 of federal student loans for borrowers that make less than $125,000 per year, and $20,000 worth of loans for similar students who have Pell grants.
Since 1980, the cost of tuition at public universities has nearly tripled, leading more Americans to take out federal loans to pay for college, according to Forbes.
A recent Congressional report found that around 45 million Americans, or around 13% of the entire U.S. population, have federal loan debt that collectively exceeds $1.6 trillion.
Ashland Source and Knox Pages reached out to students and colleges in the area to get their reactions to the debt forgiveness and hear about how this may impact the region.
Ashland County
Ashland County is the home of Ashland University (AU), a private Christian university that sits on 135 acres of land in the city of Ashland.
It offers four different colleges for students, a theological seminary, and all the amenities that come with college life like a dining hall, fraternities and sororities, dormitories and athletic departments with sports teams.
The average tuition for Fall 2022 students is $25,200 per year, AU Media Relations and Social Media Manager Hugh Howard said.
“The Ashland University student experience is affordable, as all incoming traditional undergraduate students are eligible for institutional scholarships to support their experience in their first year and each year thereafter,” he said.
Undergraduates receive $20 million in scholarships, Howard added. This means that AU students receive, on average, around $3,000 in scholarships per person.
This leaves the average AU student with around $22,000 to pay each year, either by themselves or with the help of student loans. That figure, of course, is before interest rates and associated loan fees.
For direct subsidized and unsubsidized loans disbursed on or after July 1 and before July 1, 2023, the rate is 4.99%, according to Federal Student Aid. That rate climbs to 6.54% for direct unsubsidized loans and 7.54% for direct PLUS loans.
AU senior Riley Thomas has her college paid for by her father, who makes enough money to pay tuition without financial assistance, she said. She sympathizes with federal borrowers who may feel slighted by loan forgiveness coming after they had already paid theirs off.
“I think it’s sad that people who work so hard to pay off their loans don’t get any money to help when they paid off their loans,” she said.
On the other hand, AU sophomore Emma Codding has federal loans, and she sees the forgiveness as a way to relieve some financial pressure, she said.
“I mean, the university takes enough of our money. I think it’ll certainly help,” she said.
AU father Brad Bell, who has two children attending AU that have federal loans, said he was “not thrilled” about Biden’s announcement.
When asked why, he said “because of all the people that are gonna go afterwards and all the people that went before that aren’t getting relief for it. And I don’t know where (the government) is going to get the money to pay for it,” he said.
Knox County
Knox County is the home of Kenyon College and Mount Vernon Nazarene University, both small, private universities with less than 2,000 students.
In the 2021 graduating class, 93 students were on federal loan programs at Kenyon, according to the school’s News Director David Hoyt.
The price of one year at Kenyon College is $66,240 and one year at Mount Vernon Nazarene is $33,918.
After financial aid, like scholarships, the average Kenyon student would still have to pay around $36,000 before interest and fees, and the average Mount Vernon Nazarene student would still have to pay $21,000 before interest and fees, according to data from the U.S. Department of Education.
“I think it’s a positive thing,” said Kenyon University student Auden Harper when asked about the loan forgiveness plan.
Harper said her mom was also very excited about it, noting how long it takes to pay off loans.
Student loan forgiveness, by the numbers
The nonpartisan Congressional Budget Office recently estimated that President Biden’s student loan forgiveness plan would cost the federal government around $400 billion.
The administration’s plan to extend the moratorium on student loan payments would also cost an additional $20 billion, the CBO estimated.
However, the CBO noted its $400 billion estimate is “highly uncertain.” That’s because it’s unknown how many people would have repaid their debt had Biden not taken executive action and how much they still will repay.
The CBO did not estimate how much Biden’s plan to reduce the amount of income borrowers are required to pay each month from 10% to 5% would cost. But the Committee for a Responsible Federal Budget, which has opposed student loan relief, estimates this move will cost an additional $120 billion.
However, supporters of the loan forgiveness have argued the price tag will be much lower because a portion of loans forgiven would never have been paid back. Economist Marshall Steinbaum of the University of Utah told the Washington Post that over 60% of loans have balances that rise over time, indicating they may be unlikely to be paid off.
What’s Next
Applications for student loan forgiveness opened up on Oct. 15. Approved applicants can expect relief four to six weeks after submitting an application, according to the U.S. Department of Education.
Borrowers will have a year to submit an application, but the Department of Education recommends submitting an application on or before Nov. 15, so that borrowers can receive relief before the student loan payment pause ends on Jan. 1, 2023.
However, legal challenges to Biden’s loan forgiveness program are likely, meaning that the program may be blocked or stalled before it even has a chance to take effect, according to reporting from The New York Times.
