As the U.S. Supreme Court mulls the constitutionality of President Joe Biden’s broad student loan forgiveness plan, lawmakers in many states are looking to expand their own student debt repayment programs.
Every state but North Dakota has at least one loan forgiveness plan. The catch is that most of the 129 state plans are tailored to just a single industry or profession — such as doctors, teachers, police officers or farmers. Or the plans are targeted to people who agree to work in places with a dire need for their services.
People rally to show support for the Biden administration’s student debt relief plan in front of the Supreme Court on Feb. 28 in Washington.
Maine, for example, awards forgivable loans to high school, college or graduate students who are state residents and intend to become teachers — but recipients must repay the money, with interest, if they end up working out of state. California has a loan repayment program for physicians, dentists, nurse practitioners and other health care providers who agree to practice in areas with a shortage of those professionals.
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In contrast, Biden’s plan would provide loan forgiveness of up to $20,000 for any individual borrower making less than $125,000.
But the same factors driving Biden’s plan — namely, the fast-rising cost of higher education and the mountain of debt Americans have accumulated to pay for it — are spurring many states to consider expanding their plans. At least two dozen bills are moving through legislatures this spring.
Nearly 44 million borrowers owe a total of $1.6 trillion in federal student loan debt, an average of $37,574 per person, according to the Education Data Initiative, an education research group.
“I think there’s been a lot of pressure, over the past five or 10 years, for states to step in due to the weight of student debt,” said Adam Minsky, a Boston lawyer whose practice is devoted to helping student loan borrowers. “If the (Supreme) Court strikes down (Biden’s) initiative, it would add pressure for states to step in.”
Minsky said he doesn’t think a ruling that strikes down Biden’s program would adversely affect state programs, largely because the state plans are so narrowly tailored. The legal challenge to Biden’s order revolves around a post-9/11 law that gives the secretary of education the power to forgive the student loans of borrowers affected by a war or a national emergency.
The plaintiffs, six Republican attorneys general, are challenging the Biden administration’s argument that the COVID-19 pandemic was a qualifying emergency.
Minsky, who also is the author of a handbook on student loans aimed at lawyers and law students, said it’s unlikely any state would adopt a broad plan like Biden’s, mostly because of the open-ended cost.
State programs, including the ones under consideration by legislatures this year, generally are capped.
Georgia lawmakers are considering at least four bills, including one that would repay loans for college graduates who become law enforcement officers.
Republican state Sen. Bo Hatchett said he introduced that bill on behalf of GOP Gov. Brian Kemp, who included the plan in his budget. Both the House and Senate have passed versions of the legislation, and as soon as one chamber passes the other’s bill, it will be sent to Kemp for his signature.
“Law enforcement officers are critical to the state, but often they are faced with seeking other careers to pay off their loans,” Hatchett said in a phone interview. The bills would allocate $3.2 million to fund loan repayment for up to 800 officers, up to $20,000 per officer, in exchange for five years of service in a law enforcement role in Georgia.
He said the program will be open — first come, first served — regardless of what major the officers’ degree is in.
“Across the state of Georgia and across the country, we’re seeing a shortage of law enforcement officers,” he said, “who are critical to protecting the citizens of the state and who are heeding the call of public service.”
Kemp is one of 22 Republican governors who signed a letter opposing Biden’s student loan forgiveness plan. In an email to Stateline, Kemp’s spokesperson, Garrison Douglas, said there is no comparison, since Biden’s plan was “formed by executive fiat,” while the legislative branch is shaping the Georgia program.
The other bills in Georgia would forgive college loans for certain nursing faculty, medical examiners and General Assembly staff members. The nursing faculty and medical examiner bills each have been approved by one chamber.
Representatives from both parties in other legislatures also are working on expanding financial assistance for certain kinds of workers. Two bills in New York, for example, would increase the amount of student loan reimbursement from $3,400 per year to as much as $8,000 a year for attorneys serving the indigent.
Meanwhile, in Missouri, a GOP-sponsored bill would forgive student loans for a broad swath of health care professionals who agree to work in underserved counties. The amounts of the loan forgiveness and the specific counties would be left to the state health department.
And in Maryland, a bipartisan $2 million bill would give veterinarians who have at least $40,000 in student loans from veterinary school up to $20,000 per year, for up to five years. The bill is a response to the shortage of vets in Maryland, which is also a problem around the country.
4 charts that show what Biden's student loan forgiveness means for America
4 charts that show what Biden's student loan forgiveness means for America
Like crumbling infrastructure or rising gas prices, student loan forgiveness is one of those far-reaching political issues that affect a huge swath of Americans. Close to 1 in 5 Americans have student loans. That's some 45 million people with a combined $1.75 trillion in student loan debt.
The Biden administration's forgiveness plan is expected to have far-reaching impact. It will relieve $10,000 in loan debt per federal borrower with an individual income under $125,000 and a household income under $250,000; it will provide $20,000 in relief for borrowers that attended college on income-based Pell Grants.
The announcement is welcomed news for many borrowers as the CARES Act—which paused student loan repayments for most people with federal debt—was set to expire on August 31, 2022. In addition to the debt relief, the administration's plan extends that deadline to Dec. 31, 2022.
The plan is a long time coming: President Biden first promised to forgive at least $10,000 in student loan debt on the campaign trail in early 2020 and made the same promise after he won the election in November 2020.
Stacker compiled data from the College Board, the Office of Federal Financial Aid, the National Center for Education Statistics, and the Urban Institute to visualize how student debt has grown over the past 50 years and what $10,000 of loan forgiveness could mean for borrowers.
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One-third of federal borrowers would see their debt completely forgiven
Even with $10,000 of student loan forgiveness per federal borrower, most Americans with student loans will still have some debt to repay. But effectively canceling most (or all) student loans for borrowers with the smallest amount of debt would target Americans who are most likely to miss payments. Analysis from the Federal Reserve shows that people with the least amount of education debt often have more difficulty paying it off, likely because borrowers with more debt often have higher levels of education and increased earning power. In fact, from 2020-2021, 21% of borrowers with less than $15,000 in outstanding debt were late on payments, compared to 17% of borrowers with more than $15,000 in debt. The number of borrowers who fell behind on their loan payments temporarily decreased in the fall of 2021 due to COVID-19 relief efforts; however, for many, student loan payback is a long-term challenge: According to data from the Department of Education, it takes borrowers 17 years on average to pay off their student loans.
The rising cost of tuition has made it harder for students and families to pay for college
Over the past several decades, the cost of attending college in the U.S. has steadily risen largely due to a reduction of state funding, an increase in university amenities, and unprecedented demand from prospective students. According to the National Center for Education Statistics, average undergraduate tuition rose a full 20% between 2011 and 2021 alone. Tuition at private, nonprofit institutions increased more than tuition at public schools during this time period.
Loan balances rose right alongside tuition, too. Since 1990, the average loan balance at graduation has nearly quadrupled from just under $7,000 to $30,000 in 2020, according to the Education Data Initiative, which looked at averages across all colleges.
Average federal loan packages have grown faster than the average grant size
If a student doesn't want to take on debt, federal grants—financial aid that doesn't need to be repaid—are an attractive alternative. The problem? The amount of federal grant money available to students hasn't kept up with continually increasing tuition or with the growth of federal loans. Moreover, federal grants only cover up to a few thousand dollars per year per student. One of the most common types of grant, the Federal Pell Grant, awarded undergraduate students a maximum of $6,895 for the 2022-2023 school year. The Federal Supplemental Educational Opportunity Grant—which is also awarded to students with exceptional financial need—ranges from just $100 to $4,000 per year. And not all students who are eligible even secure federal grant funding: A recent study found that the high school class of 2021 left $3.7 billion in Pell Grants unclaimed by not filing the FAFSA, a federal form the government uses to determine student eligibility for grants.
Today, loans are one of the most widely distributed forms of federal aid
For students who don't come from families that can cover the cost of an undergraduate education, navigating the financial aid application process can be challenging and confusing. Not only do you need to apply to colleges and universities, but you also have to file the FAFSA and sometimes a supplemental form called the CSS Profile to see if you qualify for federal and institutional financial aid. Unless you earn a coveted academic or athletic scholarship, qualify for need-based aid like Federal Pell Grants, or attend a university with a no-loan financial aid policy, you might turn to some form of student loan to cover the cost of your college degree.
According to a survey conducted by Sallie Mae, 47% of families borrowed money to pay for college in 2021. About 40% of outstanding student loan debt is held by people who attended public schools. The rest is held by those who attended private nonprofit and private for-profit schools.
