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Student Debt Forgiveness Sounds Good to Me.

August 28, 2022

I attended Louisiana State University for my undergraduate (1985-91). When I graduated, I had no debt. A combination of scholarships, Pell grants, and both campus and freelance jobs kept me from having to take out any student loans. Given how the cost of college has ballooned since my time at LSU, I consider myself fortunate.

Former Louisiana governor, Bobby Jindal, made it his business to slash funding for public entities, including Louisiana’s hospitals and universities. From the 2015 Advocate:

Since 2008 — the year Jindal took office as governor — tuition at four-year public universities in Louisiana has increased by an average of 67.2 percent, the fourth-highest rate in the country, according to a study by the Center on Budget and Policy Priorities. In that same period, Louisiana’s state government cut per-student support for the schools by $4,931, the largest reduction in the nation, the study showed.

After choking public support for postsecondary education in Louisiana, in 2019, Jindal opened the door for those choked entities to annually raise tuition and fees. From 2019 Nola.com:

Gov. Bobby Jindal has signed legislation that ends Louisiana’s status as the only state to require a two-thirds vote of the Legislature to increase tuition and fees at public colleges and universities.

The GRADAct does not grant Louisiana schools complete autonomy, but it will let campuses raise tuition by as much as 10 percent as early as this fall, provided they commit to improving graduation rates and other performance measures.

The plan, House Bill 1171 by House Speaker Jim Tucker, R-Algiers, was among Jindal’s top legislative priorities and moved through the process with strong support from higher education leaders.

The Legislature already authorized tuition increases of 5 percent for the 2010-11 and 2011-12 school years, independent of the parameters spelled out in Tucker’s bill.

The first increase would be automatic, but all subsequent increases — the additional 5 percent in 2011-12 and 10 percent annually thereafter — would be contingent on improving performance.

The regents would have the final say over whether a campus could increase its rates. All schools besides Louisiana State University’s main campus would be barred from raising its fees beyond the average charged by peer institutions in the 16 states that make up the Southern region. LSU’s limit would be the national average of flagship public universities.

When I was a freshman at LSU (1985-86), tuition was approximately $1300 a year (fall and spring semesters). My dorm room cost $1100.

By 2003-04, average tuition for a full-time undergraduate rose to $3,970 per year (fall and spring semesters). The average for a dorm room was $3,150.

In 2022-23, LSU’s average tuition is $11,954, and the average dorm room, $9,130. If half of this annual amount for tuition and dorm is somehow paid for without using loans, and if all other expenses (books, transportation, food) are also somehow paid for without resorting to loans, an undergraduate student who manages to graduate in four years (attending only in fall and spring and not adding additional fees for summer classes) could still be saddled with student loan debt to the tune of at least $40K. (Note that it is likely that tuition and fees will continue to rise while the student is a sophomore, junior, and senior. Too, this projection assumes that the student loans are subsidized and are not accuring interest while the student is still in school.)

Otherwise, based on 2022-23 rates, the cost of four full-time years at LSU has a price tag of $150,000.

The idea of facing that kind of debt for my bachelors degree takes the wind out of me. (Note that I did my bachelors in six full-time years, not four; at today’s rate, the cost would have been at least $225K.)

As it is, for my PhD, I graduated in 2002 with $53K in student loan debt. Roughly $10K was purely interest accruing on an unsubsidized loan. I had half-tuition paid for my first year (I was an out-of-state student attending school in Colorado) and full tuition paid for the remaining three years (I filed for Colorado residency once I had been living there for a year). I was a research assistant one year, and I taught part-time at the university the remaining three years. That’s why my loan debt for four years was only $53K.

Even so, that $53K has been like a car note for me every month for the past 20 years. As of this writing, my student loan debt from my doctorate is just below $14K. It is a 25-year note scheduled to end in 2028.

I realize that I qualify to have $5K of that debt forgiven via the US Department of Education’s Teacher Loan Forgiveness Program. I plan to submit my application this week. If approved, my balance would be reduced to roughly $9K.

(I also borrowed $3800 to buy a computer when I was working on my masters. I bought it in 1996 because I learned that trying to subsequently complete a PhD using only a typewriter was no longer realistic. Once I graduated with my PhD, I paid this loan off first.)

If President Biden’s Student Debt Relief Plan of forgiving $10K of student debt for those making less than $125K a year proceeds, then I could become one of the individuals whose student loan payments will come to an end. (The plan also includes forgiving $20K for those making under $125K and who received Pell grants in college, but I am not sure if this means who received a Pell grant in undergrad and who have grad-degree, not undergrad-degree, loan debt. It may. I haven’t yet seen any language that rules out such a situation.)

There are some who believe Biden’s debt forgiveness plan could be held up in court even though the Heroes Act has already been used to forgive student loan debt that former US ed sec and billionaire, Betsy DeVos, wanted students who had been conned by for-profit colleges to remain on the hook to pay. (in 2021, DeVos was required to show for a depostion in a class-action suit on the matter.) From the August 25, 2022, Slate:

Biden’s secretary of education, Miguel Cardona, already relied upon the Heroes Act to forgive $10 billion for public service borrowers. Now the administration is using the law as its basis for a much bigger, less targeted student debt relief program. This idea is not new: At the end of her tenure, Trump’s education secretary Betsy Devos tried to stop Biden from embracing it. She solicited a memo arguing that the Heroes Act does not permit “mass cancellation” of student debt. (In a twist, the memo was issued four days after DeVos resigned in protest of Jan. 6, and it violated basic procedural requirements.)

Under Biden, the Department of Education concluded that DeVos’ eleventh-hour memo was wrong, and that the agency can provide mass student loan cancellation because of the ongoing pandemic. The Justice Department’s Office of Legal Counsel agreed. It pointed out that under the Heroes Act, the secretary gets to decide when relief “may be necessary,” deferring to his view of who, exactly, needs financial help because of the emergency. And because this help need not be provided “on a case-by-case basis,” OLC found that the secretary can “proceed by categorical rules.”

Going by the plain language of the law alone, Biden’s plan is likely legal. Sure, it’s probably not how Congress envisioned the Heroes Act functioning. But the program fits into the text that Congress actually passed.

Concerning the Biden student debt relief plan, there’s another important piece that is not getting as much press as the $10K forgiveness, and it has to do with federal efforts to ease payment of student debt:

Income-based repayment plans have long existed within the U.S. Department of Education. However, the Biden-Harris Administration is proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers.

The rule would:

Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan.

Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.

Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.

Cover the borrower’s unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.

Even though the above concessions do not address the profane cost of attending college, they demonstrate a notable, practical effort on behalf of the federal government to ease the financial strain that many Americans face due to student loan debt.

Any forward movement on this front sounds good to me.

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