Area graduates concerned about status of student debt relief

Nov. 20—Over 26 million student loan borrowers who have applied for student debt relief received discouraging news recently.

Two of them were recent graduates from Gustavus Adolphus College and Minnesota State University who shared their frustration about the bureaucratic roller coaster ride.

"I'm disappointed because we got our hopes up only for it to get ripped away from us by people who have a backwards way of thinking," said Gustavus alumna Josseline Sanchez about a federal judge's Nov. 10 ruling that blocks student debt relief.

"It just feels like one of those things where, because someone didn't benefit from it in the past, they don't want to see others get those opportunities."

The news came after the judge in Texas ordered the Biden administration to halt the process of canceling up to $20,000 in federal student debt for millions of borrowers.

Sixteen million of them have already had their applications approved, with funds now just waiting to be discharged to loan servicers upon approval by the courts.

The following day, the U.S. Department of Education updated its website to state that, due to the court-issued orders blocking the program, it has stopped accepting applications for student debt forgiveness at StudentAid.gov.

MSU alumnus Khiap Keonangphane found it troubling.

"The forgiveness got our hopes up, thinking we'd be able to get some financial relief. Once the Texas courts filed the lawsuit, it felt like a punch to the stomach," he said.

"Fifty-six percent of students who graduated from four-year public universities had around $25,000 in student debt. At the end of the day, we're all human. If we can relieve some of that financial stress, it would make a world of difference."

Both Sanchez and Keonangphane sought out the opportunities that only higher education could offer, but they needed to take out loans to afford it.

Sanchez's dream of becoming an occupational therapist led her to study psychology and English at Gustavus.

The reported cost of tuition for Gustavus during the 2020-21 school year was $50,490. This year, Gustavus is reporting its tuition to be over $1,000 more at $51,758.

"Even with scholarships, loans were the only way for me to pave my future completely," she said. "Even now that I'm pursuing a doctorate in occupational therapy, I'm paying with PLUS loans."

PLUS loans, also known as Parent Loan for Undergraduate Students, are federal loans that graduate or professional degree students, or parents of dependent undergraduate students, can take out to help pay for education expenses.

Similarly, Keonangphane did everything he could to help cover the cost of tuition, but it simply wasn't enough. His bachelor's in computer information technology and technical communications from MSU cost more than he could rack up in a semester.

In-state tuition for MSU during the 2020-21 school year was reported to be $9,146 and $18,200 for out-of-state tuition.

"Taking out student loans was the only way I could afford to attend college. Regardless of what university you attend, you're expected to be able to provide thousands of dollars for classes," he said.

"Taking out a loan was the only way I could pay for tuition. Otherwise, I would have had to work multiple jobs on top of being a full-time student."

Ever since Sanchez graduated in May and Keonangphane just a year before, the two have been slowly grinding away at their debt.

When President Joe Biden announced his plan to alleviate some of their financial stress through the program in late August, Sanchez and Keonangphane were relieved.

As a Pell Grant recipient, Keonangphane qualified for up to $20,000 in forgiveness, covering a significant amount of his loans and lifting much of his financial burden.

"If I don't receive the loan forgiveness, I'll have to strategically budget for the next five to 10 years. Even though I have a salary job already, it's still a lot of pressure trying to manage and set up paying back loans," he said.

"Plans for the future will definitely be pushed back, as my priority will be trying to get the loans paid back as soon as possible."

Sanchez also has a lot riding on her debt being forgiven.

"I think a lot of older individuals neglect the fact that times have changed and student debt is so extreme to the point where it can leave students homeless or struggling immensely in terms of money," she said.

"I'm expected to support my family after I graduate, and if I'm not able to reduce my loan amount to a manageable place, my family's health and shelter could be at stake."

Late on Nov. 10, the two received an encouraging email from the U.S. Department of Education.

The email shared a statement from Secretary of Education Miguel Cardona, informing those that have applied for student debt relief that the department is fighting back against the ruling.

"The Department of Justice has appealed today's decision on our behalf, and we will continue to keep borrowers informed about our efforts to deliver targeted relief," wrote Cardona in his statement.

"Despite this decision, we will never stop fighting for the millions of hardworking students and borrowers across the country."

Since then, however, more lawsuits have come forward challenging Biden's highly controversial plan.

His administration has remained firm in its position to launch the $400 billion program under the emergency-based HEROES Act, but opposition from conservative groups and several GOP-led states continue to emerge.

On Nov. 14, four days after the Texas ruling, a federal appeals court issued a nationwide injunction indefinitely blocking the program in response to a challenge by six GOP-led states.

The 8th Circuit Court of Appeals in St. Louis came to a unanimous ruling after Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina argued the program threatens their states' future tax revenues and that the plan overrode congressional authority.

U.S. District Judge Mark Pittman called Biden's plan unlawful and stated in his order that the HEROES Act is not an "open book to which the agency may add pages and change the plot line."

The Texas ruling was prompted by a lawsuit filed by a conservative group, Job Creators Network Foundation, on behalf of two borrowers who did not qualify for debt relief.

Following the ruling, the president of the group, Elaine Parker, issued a statement claiming that "This attempted illegal student loan bailout would have done nothing to address the root cause of unaffordable tuition: greedy and bloated colleges that raise tuition far more than inflation year after year while sitting on $700 billion in endowments."

While Keonangphane disagrees with the lawsuit, he agrees that the cost of tuition is growing more and more unaffordable each year.

The average annual cost of tuition at a public four-year college is 37 times higher than tuition in 1963, according to the Education Data Initiative at EducationData.org. In the 1980s alone, tuition prices increased 121.4%.

From 2010 to 2020, tuition inflation averaged 4.63% annually.

"It almost feels like a risk to go to college for four years, because you truly never know how it could affect you once you've graduated," he said.

The U.S. Department of Education responded to Parker's statement and the cries of many others in the email from Cardona.

"We remain committed to taking other actions to fix long standing issues in the student loan forgiveness system and hold schools accountable for leaving students with mountains of debt and without the skills and preparation to find good jobs," he wrote.

Monthly loan repayments are to resume Dec. 31 after an almost three-year pandemic-related postponement, with borrowers unlikely to see their balances forgiven before the new year.