Friday’s Supreme Court decision canceling President Biden’s student loan cancellation plan left many borrowers wondering: where do we go from here?
« I’d say Congress has to pass it, but it’s not going to happen, » says Graeme Strickland, a 25-year-old borrower in Raleigh, NC. « It’s become a culture war around this issue. And like, this is my income. This affects the money that I am able to spend on groceries ».
Strickland attended the University of North Carolina, Chapel Hill as a state student. To participate, he had to take out about $30,000 in federal loans, which is on par with the national average for a three-year degree from a public institution.
He graduated in 2020 at the height of the pandemic and has yet to consider loan or interest payments — both have been on hiatus since he was a student. Now, with Biden’s student loan relief plan officially dead and payments set to resume in the fall, Strickland has resigned himself to his new debt-laden reality.
« So in terms of loan forgiveness, where do we go from here? I don’t think there’s anywhere we can go. »
If Strickland looks defeated, he’s not alone.
For years, borrowers have been left in a waiting pattern awaiting the path to debt relief that President Biden promised during the election campaign. His administration finally announced its student loan plan last August, waiving up to $20,000 for eligible borrowers.
But the recent Supreme Court ruling reversed the program and drove the final nail in the coffin on widespread debt relief.
« There was no trust before. There is no trust now. »
Carolina Rodriguez spends her days talking to borrowers like Strickland at New York’s Education Debt Consumer Assistance Program (EDCAP). She says such feelings of defeat and resignation are not unusual.
« There was no trust before. There is no trust now, » she says. Most of the borrowers he talks to these days are more focused on other paths to forgiveness, such as Public Service Loan Forgiveness (PSLF) and Income Based Repayment (IDR) plans.
Under the Biden administration, he’s seen investment in these programs and a deluge of change in the student loan landscape: « We joke sometimes in the defense community, it’s like a decade of change in two years. »
And with the influx of new policies has come a new relationship with deadlines. Rodriguez says his staff expect last-minute extensions and changes, as do borrowers. He rarely gets calls anymore about the impending restart of federal student loan payments because, he says, the borrowers have been here before.
But he expects a surge as the summer winds down and payments finally resume: « Many borrowers will continue to deny that they now have to plan for this. »
Michael J. Petrilli, president of the conservative-leaning Thomas B. Fordham Institute and a longtime critic of Biden’s plan, understands the denial and says the blame lies squarely with the administration.
“They were taking a big risk…to raise people’s hopes, and now they see those hopes dashed,” he says. « That’s politics, right? But I think it comes with a lot of deception and the administration should be called out for it. »
He called the debt relief program a « cynical ploy » by the administration, damaging: « The goodwill that could come from targeted student loan forgiveness can be put at risk by trying to provide forgiveness to virtually everyone. »
Borrowers brace for smaller budgets, greater financial stress, as payments resume
Ariana Cuellar, a 31-year-old borrower from San Antonio, says the payment hold was « a gift, » one she will greatly miss. She has gotten used to little comforts like having a constant savings account and not stressing about every « purchase over $20. »
He has over $30,000 in student loans, which is more than he originally took out for his college degree, due to a short grace period after graduating in 2013.
This hiatus allowed her to switch careers and pay off her car, things that seemed overwhelming with the burden of her student loan payments. All of her loans are held federally, and under the Biden administration’s plan, she would receive $10,000 in write-off. She recalls that the day it was announced was « really joyful »—it gave her some hope. But not enough to ease the pressure of paying interest on top of her original debt.
« I’ll never be able to get out of these loans. I think even if we get that $10,000 forgiveness, unless the interest rates change, I won’t be able to get out. »
Now, with the return to repayment imminent, she has resigned herself to a smaller budget and more financial stress. The winding road to the Supreme Court decision has exhausted her.
« I have lost faith in any kind of justice, » he says. « I don’t think it will get better. I don’t trust the government to take care of us. »
Borrowers have been frustrated by the federal student loan system for years
Biden’s relief plan did not cover all federal student loan borrowers. Initially, people who took out older Perkins loans and Federal Family Education Loans (FFELs) were eligible to qualify for the program. But, in a quiet reversal, the US Department of Education has changed its guidance on those loans, saying they’re no longer eligible.
FFEL loans, issued and operated by private banks but guaranteed by the federal government, were once a mainstay of the federal student loan program until they were phased out in 2010. Borrowers would be excluded from the relief.
Chris and Brigid Kennedy, a married couple from South Carolina, are among those barred from Biden’s plan because they have FFEL loans. And it’s not their first time guy of the loan dictated if they have received the forgiveness.
Years ago, the Kennedys, who are both educators, consolidated their student loans as part of a short-lived Department of Education program for married couples. What they didn’t realize is that those new joint consolidation loans would disqualify them from potentially canceling their debts through public service loan forgiveness.
Brigid Kennedy says this recent blow is painful, but nothing new.
« We really feel it’s our responsibility to pay off these loans, » she says. « But we also gave the principal back about two and a half times what we took. »
Their student debt is in the hundreds of thousands, an intimidating figure for two public educators. Plus, Chris is currently battling cancer, which means he might benefit from an interest-free deferral. The pair have been back and forth with their servant, asking for that postponement as he undergoes the treatment. They finally got an answer recently: because their loans are consolidated into one loan, Both of them would have to have cancer to qualify for an interest-free break in payments.
“I just started laughing, and then I started crying because, I mean, the absurdity of how this has been played against us is ridiculous,” Brigid says. The couple is now in forbearance, a less lenient way to withhold payments where the interest keeps piling upas they put their resources into Chris’ treatment.
Their group of consolidated borrowers won a hard-fought victory last year, getting a bill through Congress, signed by the president, to officially separate their loans and, in turn, qualify for federal forgiveness programs.
However, in another blow to the Kennedys’ confidence in the federal student loan system, there has been radio silence since the bill’s passage. The couple say the last time they called someone on the phone, they said they wouldn’t see a solution until the end of 2024.
Visual design and development by: LA Johnson
Edited by: Nicole Cohen and Steve Drummond