BOSTON — Once Merrimack grad student Chris Bell graduates, he will have more than $16,000 in loans.
“I’m just working and trying to save up money,” Bell said.
Quinnipiac grad Marcie Naumowicz of Walpole spent $70,000 and 13 years paying off her loans, and now that she’s finished, the pathway to loan forgiveness has begun.
“I’m jealous,” Naumowicz said. “I do wish for people to know that when they’re graduating from college that they won’t have that burden on them, and then maybe people can go into other fields. I would have gone to school more if I didn’t have student loans.”
Student loan forgiveness is not in the $1.9 trillion COVID relief package, but a tax break on forgiveness is.
The provision says any student loans forgiven between now and December 2025 will not count as income, so you won’t be taxed on it. That could make it easier for President Joe Biden to listen to Majority Leader Chuck Schumer and eliminate up to $50,000 per borrower by executive order.
“That would be almost twice as much as the federal government has spent on all Pell Grant recipients over the last two decades. And, of course, Pell dollars typically go to low- and middle-income families that probably need the money more,” said Nick Ducoff, the CEO of Edmit.
President Biden has signaled a preference for Congress to set a $10,000 limit.
“60% of student debt is held by the highest 40% of earners,” Ducoff said.
“In regards to wiping away something that you took out personally, I think you should be, at the end of the day, responsible for that, but also the government should give you a fighting chance to take that because it’s no point to take out 100 grand and the next time you look at your balance and it’s $110 grand,” said Mike Fortin, a Walpole resident who graduated three years ago and paid off about $20,000 in loans.
Some people don’t want any forgiveness, saying if you decided to take out a loan, you should have to pay it. For those who want it, the debate has become $10,000 in forgiveness that will barely make a dent, especially with struggling families, or $50,000, which could help people who don’t need it.
Critics of loan forgiveness point to studies like a Goldman Sachs analysis that found forgiving $10,000 per borrower would add less than one-tenth of a percent to U.S. GDP.
Bell said whether 10K or 50K, “it would help me out a lot.”
“Most student debt is held by the highest earners and those most likely to default on their loans are less than $5,000 in debt,” Ducoff said. “That’s often students who didn’t finish college and don’t have the same earning potential.”
If you have federal student loans, because of the pandemic, they will remain interest-free through September 30 of this year.