Economists and higher education experts intervene
SARASOTA — Certified financial consultant and mother Kaveecia Moore is a “by-product” of the Great Recession, having earned her undergraduate degree more than a decade ago as the economy imploded.
At a time of high unemployment, she decided to go back to school and earn her MBA, while racking up six-figure student loan debt.
Today, this lingering debt is one of the main reasons she has yet to become a homeowner.
“I came out of undergraduate with a little debt, then went back to school to further my education and racked up six figures in debt,” she said.
Higher education experts say his experience is not uncommon – that home ownership, family planning choices and many other life decisions are affected for graduate students.
A national association of real estate agents study highlights the disparity in homeownership for millennial borrowers and reveals how student debt has historically been a roadblock to home buying for low- and middle-income earners.
Moore, 37, is among those with student loan debt who will benefit from the recently announced Biden administration to write off some of that debt. She has mixed feelings about the plan. As she gets up to see some relief, she had hoped for more.
“We take these loans to get better jobs, to improve our lives and our communities. Companies are being forgiven millions in PPP loans,” she said, referring to pandemic-related aid. “I think there should be the same consideration for the working class in America as there is for corporations.
But others have criticized the plan, saying it is unfair to those who have paid for their education or loans themselves. The backup plan can also be challenged in court.
USF Sarasota-Manatee graduate student Lindsey Couvillon said she owed $76,000 in student loan debt.
She earned her bachelor’s degree in psychology in 2017, at a time when she had already racked up $60,000 in debt.
For the past eight years, Couvillon has been a student and has held up to three jobs at a time to pay for her education. She recently accepted an additional loan of $16,000 for her higher education.
“I wasn’t entitled to any scholarships or anything… I pay for my education entirely on my own and through loans. I knew I would have to pay them back, but I didn’t understand the seriousness of it when I started school at 19,” Couvillon said.
With no other options and no financial support from her parents, Couvillon said she was left with only loans as a way to fund her education.
Couvillon, 29, plans to complete his master’s degree in 2025, but plans to continue his studies one last time by obtaining his doctorate. Her student loan debt will be just under $200,000 when she completes her doctorate.
“At first, a few years ago, I was thrilled to hear that the loans were going to be forgiven…I’ve had three jobs and never made enough money at any time to pay them back. I’ll have to pay for this for the rest of my life,” she said.
“In the back of my head, that thought is still there and I dread it.”
Although she is proud to achieve her goals, Couvillon says she feels the weight of her financial situation and worries about starting a life in debt with a future partner, having children and also owning her own house. .
“It’s ironic, you have to do something you hate to pay for your future, for a better career. It’s frustrating. I need more time to study but I have to work to study and take care of me.” said Couvillon. “Doing my studies is very bittersweet.”
Plan to cancel some of the borrowers’ debt
President Joe Biden’s student loan relief in three parts the plan provides for cancellation of student debt for “those most in need,” according to its fact sheet. The long-awaited and closely scrutinized relief package is expected to cancel around $240 billion in student loan debt for 43 million borrowers – although some economic experts say cancellation could cost billions of dollars.
Up to $10,000 of federal student debt per borrower and up to $20,000 for Pell Grant recipients will be forgiven. Debt cancellations are also expected for individuals earning less than $125,000 per year and married couples or heads of households earning less than $250,000 per year.
Florida state borrowers account for $100.9 billion of total student debt, according to a report by the Education Data Initiative, a researcher-led think tank that collects accessible data on the education system. Their spring 2022 reportfound that borrowers who reside in the Sunshine State have student debt of about $38,000, just north of the national average of $32,000 per borrower.
Millennials make up nearly half of Florida’s 2.6 million borrowers who owe student loans.
However, local higher education advocates, young professionals and economists agree that the median number is not a clear picture of how student debt and a bloated economy have affected many borrowers.
Michel Snipes, a Sarasota-Manatee professor of economics at the University of South Florida, says the amount borrowers are in debt is only part of the overall problem.
Since the announcement of debt forgiveness on August 24, Snipes has noticed that borrowers, both those still in debt and those who have paid off their loans in full, have weighed in on the plan – with some calling the forgiveness a unfair while others welcome debt relief.
“If a borrower was able to make those payments up front, that means you have money to start with,” he said. “No one is going to take out a student loan unless they have to. People can act in good faith, make regular, regular payments, but because the interest rates are so high, they only pay interest and they never reduce that capital,” Snipes said.
Snipes argues that the loan cancellation plan will have no significant socio-economic impact for borrowers who are still repaying their debt. The plan, he said, does not address the fundamental issues of debt and tuition fees.
Many students come to college with little or no knowledge of how debt works – most of whom are first-generation, low-income, marginalized students. The majority of students who apply for loans do so, Snipes argues, as the only option to pay for high school. Snipes added that most borrowers take out loans without having a clear understanding of the ramifications of compound interest, debt repayment and defaults, he said.
Moore, who works as the internship and career development program coordinator at the Sarasota Chamber of Commerce, said even with her knowledge of debt and loans, taking on the “right debt” to further her education was a decision. challenging that all students are so equipped to do at a young age.
She said her hopes of buying a house were dim, with student debt and the high cost of housing creating further hurdles.
Foster financial literacy
At New College of Florida, faculty and advocates strive to equip students with financial knowledge and tools to help them better navigate the complexities of student loans.
Bill Woodson, dean of outreach at NCF, said the institution’s focus on financial literacy can be a game-changer for incoming students and a big step in avoiding unnecessary student debt.
“The cost of education is too high and the lack of understanding of financial literacy is also high. We educate and promote financial literacy to a cohort of local low-income students. They learn the return on their investment,” Woodson said.
Students learn about the cost of tuition, housing and other college-related expenses and have the opportunity to apply for a range of scholarships, all aimed at helping reduce up-front tuition costs and eliminate financial obstacles on the way to higher education.
Woodson acknowledged that division around the federal debt relief plan is not uncommon when a new program is announced.
“Programs and policies will never be perfect; no program will be perfectly right,” he said.
“There are all these different borrower debt scenarios…I think this plan was a reasonable first step. But we also need to do a better job of educating our young people and families about the cost of a college education to begin with.
Samantha Gholar covers social justice news for the Herald-Tribune and USA TODAY Network. Connect with her on [email protected] or on Twitter: @samantagholar