Millions of student loan borrowers cheered in August when President Biden announced a plan to cancel up to $20,000 in college debt. Most people with student loans were eligible. Applications were quick and easy.
The promise seemed almost too good to be true.
“It was such a boost,” said Lashaunda Watson, a 41-year-old student at Southern New Hampshire University who owes almost $20,000. “Nothing like this had ever been done in the country’s history.”
Then it all came to a halt. Lawsuits poured in from conservative groups and Republican-led states, arguing that Biden had overstepped his authority by issuing an executive order to simply forgive student debt ($10,000 for borrowers who earn less than $125,000, or married couples earning up to $250,000, and $20,000 for Pell Grant recipients). Some lower court judges agreed and put the order on hold. The matter now could go all the way to the Supreme Court.
For borrowers in New England, the uncertainty feels like a historic gift snatched away. Hopes dashed, fears confirmed.
“One way or another, I was going to get this education,” Watson added. “But I felt a lift by this idea of the debt being canceled because I wouldn’t have had this added weight. I could fly. I could run a little faster. It’s disheartening to see that the assistance we were all excited about may not come to fruition.”
Critics argue that canceling student debt is offensive to Americans who have already paid off their loans. Others note the potential economic impact, and argue that it sends a bad message. Eighty-year-old John Carberry, of Needham, who reached out to the Globe in response to an online callout, said the move teaches people “that signing an obligation has no meaning. To write off college loans and not other debt is doing a disservice to our society.”
But over a dozen borrowers told the Globe how the debt-relief plan would change their lives for the better, easing their monthly budgets and helping them stay in — or join — the middle class.
They’re teachers, social workers, program managers, and oftentimes also parents, like Watson.
The single mother of four borrowed to cover tuition for her business communications degree, a diploma Watson believes will help her launch a business and buy a home. She intends to pay off the loans herself with earnings from her job as a financial coach. But when the forgiveness plan was announced, Watson applied immediately. Cutting out that monthly payment could make it easier for her to leave subsidized housing in Roxbury and pay for rent, groceries, and school supplies.
“I want my kids to have a better setup than when I started this race,” she said.
Despite the lawsuits, the Biden administration is pushing forward. Officials have already approved around 16 million applications, (Watson’s is still being processed) and US Education Secretary Miguel Cardona encouraged borrowers to keep up hope.
“We believe strongly that the lawsuits are meritless,” he wrote in e-mails to applicants. The administration will “discharge your approved debt if and when we prevail in court.”
Betsy Mayotte, president of the Institute for Student Loan Advisors, predicted that forgiveness will roll through eventually, though not by the end of the year as Biden first announced. This week, the administration extended the COVID-era pause on repayments, which had been set to end Jan. 1. Payments will now resume either 60 days after the debt cancellation program is implemented, 60 days after the lawsuits are resolved, or Aug. 1.
Still, the sudden stop and negative headlines made some borrowers pessimistic the program will ever come to pass.
Should Biden’s plan survive legal challenge, Douglas Hamilton would have all of the $14,000 he owes forgiven, since as a Pell Grant recipient, he’s eligible for $20,000 in relief. But the Berlin, Conn., resident is not counting on anything.
“At this point, I have zero hope,” said the 57-year-old, who went back to school to change careers in the late 2000s. “I might as well pray the Easter bunny is going to show up.”
Katie Hutchinson of Milton is skeptical, too.
“I’ll believe it when I see it,” she said.
A midwife, Hutchinson has $65,000 in outstanding debt, barely below the $73,000 she took out 17 years ago to attend Yale. She paid on her loans regularly when she could, but the interest built up, particularly during her years-long stint as an unpaid volunteer for Doctors Without Borders in Haiti and South Sudan. When payments restart, Hutchinson’s monthly payment will be around $675. Writing off $10,000 would lower that number.
“Otherwise, it blows up our budget,” she said. “I don’t know where that money is going to come from.”
As it stands now, the Biden plan does not address what advocates say is the biggest issue: the cost of tuition. The price of public college rose 31 percent between 2010 and 2020, and the Department of Education estimates that the typical student now finishes their undergraduate degree with $25,000 in debt. Many more take on loans but never finish school. And forgiving loans today doesn’t do anything for future generations of students, many of whom will likely be saddled with debt, too.
But Biden’s order could be a step toward broad institutional reform, said Patrick Griffin, an insurance program manager in Norwood. For him, $10,000 in relief would eliminate about one-fourth of what he still owes from attending Dartmouth nearly 20 years ago. But he knows people for whom it would make a much bigger difference in covering daily expenses.
“Imagine if 50 million woke up tomorrow and said, ‘Hey, I can get my car fixed,’” Griffin added. “Millions of people would have more money to inject into their communities. Millions of people would be able to afford to start families. It is simply a public good.”
And Carole Carter, a Roslindale resident with less than $10,000 of debt left to pay, said forgiveness could save others from a system she believe works against students and their families. She and her husband were able to manage his graduate school loans, and their sons’ college tuition. But because of those student loan payments, the 66-year-old Carter was only able to start squirreling money away for retirement last year.
“I am almost done. But I never want anyone to go through this again,” she said. “Why would I want that?”