Jocelyn Biddle-Hill, 24, of Pittsburgh, will have her entire $18,000 in student loans forgiven before she has had to make a single payment.
President Joe Biden announced Tuesday that the federal government would forgive up to $10,000 in federal student loan debt for anyone making less than $125,000 per year and up to $20,000 for Pell Grant recipients.
Biddle-Hill tried to limit her debt as much as possible. She earned a semester of credits in high school and then spent a year at the Community College of Allegheny County. Her friends were heading off to university right away, but she waited a year. When she transferred to Kent State University as a sophomore, she continued to work full time and became a resident advisor, which paid for the cost of her dorm room.
When she graduated, she still owed $18,000, despite being a federal Pell Grant recipient. She was the first person on her mom’s side of the family to graduate from college.
Biden put all federal loan payments on hold during the pandemic and announced Wednesday that payments won’t restart again until 2023. Biddle-Hill saved money every month that would’ve gone to her student loans. But now that the loans will be forgiven, she thinks her savings could put her closer to buying a house soon.
“Which is something I didn't think I would be able to do probably for another ten years,” she said. “And suddenly, that timeline has completely shifted.”
But despite the celebrations of some, student loan relief is wildly unpopular among Republicans, who say it unfairly provides money for a select few who attended college. And some Pittsburghers with large student loan debts don’t think Biden’s plan went far enough.
Does debt relief make sense economically?
Najeeb Shafiq, an education economist at the University of Pittsburgh, said President Joe Biden was in a tough spot because, politically, he had a lot of pressure to cancel at least some student debt but there wasn’t widespread agreement about how to do it. The amount of relief Biden chose was a middle ground between economists who didn’t want any debt relief and those who thought it should be much higher, he said.
“No matter what he does, a sizable share of the population will be unhappy,” Shafiq said.
Biden’s plan has some features that liberal economists like. For instance, it provides more money for lower-income graduates by capping the income level for people who receive it and providing more to low-income Pell Grant recipients. There is also research that shows Black women, in particular, have a hard time paying back their loans, and this program will help them, he said.
One drawback of the plan, Shafiq said, is it takes away some of the incentive for colleges to reign in their costs. The cost of college has become unsustainably high for many, he said, and this new program will delay pressure from debt-burdened graduates to force changes.
The political repercussions could be the most consequential, Shafiq said: Because the program doesn’t help blue collar workers, it could breed resentment. “Because if you're going to have this program and not have a separate relief program for those without college degrees, then you can understand sort of the resentment and opposition to this,” he said.
But politics were also the reason the plan happened at all, he said. College graduates are disproportionately Democratic voters, and this new program will disproportionately help drive Biden’s base to the polls this November. This may seem like buying votes, but this happens in both parties, he said. For example, he said, the 2017 tax cuts disproportionately helped higher-income individuals who tend to vote Republican.
“Is this the absolute best use of money in order to improve wealth? Is this the most societally equitable intervention that could have been pursued?” he said. “Perhaps not, but that's kind of what political parties do.”
Not nearly enough
Bethany Hallam, Allegheny County councilperson, was disappointed with the news. The $10,000 is better than nothing but won’t help people like her, she said, who are only paying off the interest on their loans. Before COVID-19, she was paying $276 per month on her roughly $40,000 in undergraduate loans.
Her payments won’t go down, she said, because they were already capped by her income. She wants the government to lower the interest rates on student loans to make them easier to pay off.
Hallam didn’t realize at 18 that taking out tens of thousands in loans would mean actually paying back more than twice that amount in interest. She thinks college should be for everyone and the government should pay for it by cutting back spending on the military and police.
She spent two years trying to buy a home, she said, and was only able to purchase one in 2020 because she got a good deal from a family member.
But despite being unhappy with her undergraduate debt, she is now taking on twice as much debt for law school. To limit her debt, she’s only taking out 50% of the tuition cost in federal loans and not taking out any private loans. That means she has to pay $2,300 every month to cover half of her tuition. There’s not a lot of money left over, she said, on a salary of just over $70,000, she said.
“I wanted to be a lawyer, and I knew that the only way to be a lawyer and to help people as a lawyer was to incur the debt of law school,” she said.
Jordan Covvey, an associate professor at the Duquesne University School of Pharmacy, said the $10,000 won’t help her much either. She originally owed $120,000 when she graduated but that number has ballooned to $180,000 because of interest accrued during deferments for a PhD program and a one-year residency.
Still, Covvey is happy for the tens of millions of people the announcement will help, including many of her students. There are provisions in the announcement that could help her, she said, such as limiting the percentage of income she has to pay from 10% to 5%.
But it’s not totally clear if she will benefit. She received a pharmacology degree over six years and never received a Bachelor’s degree. So it’s not clear if the debt from her professional degree program will be eligible: Biden’s announcement is supposed to apply only to undergraduate student debt. She’s also two or three years away from having her debt canceled as part of a public service loan forgiveness plan.
Biden’s plan doesn’t address the underlying problem, she said. “I've held a job since I was 16 years old. I went to a public university. I applied for as many scholarships as I could. I graduated summa cum laude from my class. I did all of the things that everybody shames student borrowers for. Saying, ‘Why didn't you do this?’” she said. “The unfortunate part is that higher education right now is exceedingly expensive.”
