University of Texas Permian Basin officials are not sure how the Biden Administration’s loan forgiveness plan will impact students, but they suspect it will be beneficial.
Senior Vice President of Student Affairs and Enrollment Management Becky Spurlock said while it was clear what Biden intends to do, the way it rolls out will come from the U.S. Department of Education and they had not released any details yet.
Spurlock and Assistant Vice President of Enrollment Management and Director of Financial Aid Scott Lapinski could talk about what they expect, but they were waiting for the bigger picture.
Last month, President Biden announced the administration’s plan to give working and middle-class Americans more breathing room by providing up to $20,000 in debt relief to Pell Grant recipients and up to $10,000 to other borrowers, a White House news release said. The Biden Administration expects that over 40 million borrowers are eligible for its student debt relief plan, and nearly 20 million borrowers could see their entire remaining balance discharged.
The student debt relief plan will help borrowers and families recover from the pandemic and prepare to resume student loan payments in January 2023. Nearly 90% of relief dollars will go to those earning less than $75,000 per year – and no relief will go to any individual or household in the top 5% of incomes in the United States.
By targeting relief to borrowers with the highest economic need, the Administration’s actions are also likely to help narrow the racial wealth gap. Nearly 71% of Black undergraduate borrowers are Pell Grant recipients, and 65% of Latino undergraduate borrowers are Pell Grant recipients, the release said.
There are also income-driven repayment plans and many other provisions.
“I think without knowing the details, the (main) idea of loan forgiveness, particularly the way that the President constructed it around, amounts being for income sensitive and related to Pell eligibility means that our particular profile of students, many of them, if not most of them, would meet the $20,000 forgiveness. Given that our overall loan debt average for students here is below that, it has the possibility of having a very tremendous and positive effect,” Spurlock said.
Lapinski said it covers graduate school loans, too.
Spurlock said there is a lot they don’t know like whether forgiveness will apply to current students, or will it only apply to people once they are done with school.
“… If they had direct loans, they can get those consolidated … and then those can also be part of their forgiveness,” Lapinski said.
Asked if students take out multiple loans, Lapinski said it depends on if the student has reached their federal loan aggregate limit.
In that case, they may take out a private loan from a bank to pay for the rest of their education.
“Sometimes people have good enough credit to where their interest rate on the loan from a bank is actually less than a federal loan,” Lapinski said.
Spurlock said there is a lot of talk about the current loan forgiveness announcement, but loan forgiveness has been in place for a number of years in various forms.
Spurlock said those programs were largely connected to certain fields of service.
Lapinski said you could get a loan discharged because of permanent disability and public service loan forgiveness has been in place since about 2010.
“… I think what has happened in the last year has been that there was an expansion and reconsideration regarding the Public Service Loan Forgiveness Program, because it wasn’t meeting its original intended purpose and it was expanded quite a bit …” Spurlock said.
Between this and the latest forgiveness program, “they will apply to many, many more people than were eligible before,” Spurlock added.
Debt accumulation depends on the type of school someone attends, how much it costs and how loans are provided to students.
Private schools tend to have higher tuition and fees, Lapinski said.
As a first-generation college student, Spurlock said she took out the maximum amount of loans she could get her hands on.
“… I did okay in high school, but I didn’t come out as an academic superstar. I didn’t have Merit scholarships. And while I didn’t … qualify for some of the loan programs, or some of the programs (you get) when you are really needy, (it was) not because I wasn’t, but because I didn’t meet some of the legal definitions,” Spurlock said.
With no adults helping her, she said she’s sure there were times she took out more money than she needed, but she didn’t know how much things were going to cost.
Spurlock went to school for a long time, but had a low-wage job when she graduated so she wasn’t able to make the dent in her payments that she needed to.
Students who don’t complete their degree wind up in a really tough situation because they’ve accumulated debt on the idea that they’re going to be able to make more with a degree, but then they don’t finish it.
“Now here at UTPB, our overall loan debt, on average, is less than half of what the national debt is,” Spurlock said.
The average national student loan debt is about $37,000, she said.
Spurlock said UTPB’s low loan debt is due in large part to its low cost.
“We work very hard to keep our costs low …,” Spurlock said.
Lapinski said sometimes older students use their loans to help supplement their income because they may have had to cut back on their workload.
“… It’s fair to say that people take out loans to pay for their education, but often they’re just trying to pay for their lives and often that might be a source of income for the whole family,” Spurlock said.
Lapinski said when he got out of the Navy, he was used to making a certain mount of money. But then he and his wife went to school at the same time and he was working at a Subway. He used his loans to help supplement his income.
Spurlock said she thinks many people will want more details on the forgiveness program to understand it.
“But I do think that this will, overall, encourage more participation in higher education. I think there will be people who, for example, now that they have some debt for forgiveness, that they will now be able to say, Okay, now I have the ability to go back and get a master’s because I … can pay for that, but I couldn’t pay for it while I was also paying for my undergraduate loans. …,” Spurlock said.
Or if people have loans, but don’t get a degree they may gain the capacity to go back to school. Spurlock said it may also spur those who haven’t gone to college yet to go for it.
