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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 on a $38 PR salary. $000 a year in Austin.
When his loan repayment plan was halted during the pandemic, it gave him enough leeway to afford rising gasoline and food prices.
But on Wednesday, she found her education bill was gone after President Joe Biden announced the federal government would forgive $20,000 in student loan debt for borrowers who also received federal Pell grants.
“I am very stunned and shocked,” Vavis said Wednesday. “I didn’t expect to have no student debt until I was at least 30 just because of where I live and the high cost of living. Trying to budget for student loans has always been stressful. And now having that off my plate is a big relief.
Biden’s student loan cancellation plan comes after months of debate. People earning $125,000 or less will see $20,000 of student loan debt wiped off their college bill if they used federal Pell grants to pay it off. Those who have not used these federal grants will see $10,000 eliminated from their student loan debt. Loan forgiveness applies to borrowers whether or not they have obtained degrees.
In 2021, 56% of students graduating from four-year public universities had student debt of around $25,000, 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, southern regional director of Young Invincibles, a national youth organization. “It especially helps black students, [who] have the highest percentage of students, 72%, who receive Pell grants. With this increased forgiveness, an estimated 20 million borrowers will see their entire remaining loan balance wiped out.
This is the first time in US history that a president has granted widespread forgiveness of student debt. This decision was criticized on both sides of the political spectrum. Democrats have argued that Biden should cancel more student debt while Republicans argue debt cancellation will increase inflation and oppose any cancellation for high-income earners.
The Biden administration argues it has the legal authority to forgive student debt based on the Higher Education Opportunities for Students Relief Act of 2003, but higher education experts said there would likely be lawsuits brought to question the authority of the executive.
Biden also extended the COVID-19 pandemic pause on loan repayments once again, through the end of 2022.
For students who have more debt than the cap announced Wednesday, feelings are mixed.
Austin resident Kalyn Williams has about $60,000 in student debt from her undergraduate and graduate degrees, which she repaid under the federal income-tested repayment plan. She owes about $10,000 more now because her monthly payments don’t cover the cost of accrued interest on the loans. This decision brings her back to where she was when she finished her master’s degree ten years ago.
“I’m happy, but I also wish it was more because all he campaigned on was, you know, forgiving loans to people who had gone to public schools, which I did. “, she said. “And so it’s kind of like, great, but not quite 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 cancel loan balances after 10 years of payments instead of the current 20 years for those with a balance of $12,000 or less.
For Williams, it’s unclear how this change would affect her final year of student loan repayment since her income has increased during the pandemic.
Stephanie Borden, who lives in Carrollton, still has about $57,000 to pay off on her student debt. She said she appreciates any help reducing the debt and hopes the forgiveness will reduce her monthly payment by $400. She didn’t realize how much of an impact this had on her life until she was able to suspend payments during the pandemic.
“Four hundred dollars is a lot of money and realizing I’m not paying it, I don’t have to live paycheck after paycheck. I can afford to do this fun thing with my friend, I can afford this thing that I need and have been putting off for years,” she said.
The full program is now LIVE for 2022 Texas Grandstands Festival, which will take place September 22-24 in Austin. Explore the timeline of over 100 insightful conversations coming to TribFest, including the inside track on the 2022 election and 2023 legislative session, the state of public and higher education at this stage of the pandemic, why Texas suburbs are booming, why broadband access matters, the legacy of slavery, what really happened in Uvalde and much more. See the program.