How student loan relief will affect some local residents
Local resident Lisa Sylvester owes around $70,000 in student loans, but it wasn’t always that much.
“In the beginning, it was $32,000 or $35,000, and it went up to $70,000 because I had to keep deferring it,” Sylvester said last week.
Though she is an accounting manager at a nonprofit, she doesn’t qualify for forgiveness programs that are applied to borrowers who work in government or not-for-profit jobs for at least a decade.
She looked up her interest rate last week after President Joe Biden announced plans to forgive up to $10,000 or 20,000 for certain borrowers. It’s 4.25%.
“There's people like me who if I paid off my loan, they'd get double their payment, double their loan back because of the interest that's been accrued,” she said.
The U.S. Department of Education says there are about 122,000 borrowers in the state with an average student loan debt burden of roughly $38,000.
The department estimates their collective federal student loan debt totals more than $4.5 billion.
“The national conversation has been evolving over some number of years because it’s fairly clear that the sizeable amount of student debt that people have been accumulating becomes relatively unsustainable,” Debora Halbert, the vice president for Academic Strategy at the University of Hawaiʻi said Monday.
According to the university, the average total debt of a four-year student in last year's graduating class was just over $22,000.
“Hawaiʻi is very lucky that our state government still supports our higher education at a rate that is much higher than many other states,” Halbert said. “As a result, we’ve been able to keep tuition more affordable than other state institutions.”
The federal relief program will remove $10,000 for those making $125,000 or less annually. For those with Pell Grants, $20,000 will be forgiven. Some borrowers will need to apply for the program, while others will have it applied automatically. The U.S. Department of Education is finalizing these plans.
“The federal government hasn't released its specific details for what will happen, so there's been some amount of discussion over how it will look and how we'll be able to communicate out to students once application forms are available,” Halbert said.
Halbert reports that she's heard a sigh of relief from students and alumni.
“It seems to me from what I've heard that students who have already acquired debt are seeing this as a way of helping to relieve some of that, and there's a lot of relief from students' voices about what that's going to mean,” she said.
Realtor Candance Day is in a similar position to Sylvester.
“I have a huge amount of student loans. However, I did not borrow that much,” she said.
Day suggests a more regulated approach. She suggested that forgiveness be applied on interest rates, or be taken on like car or home loans.
“We're made to feel bad for the fact that we are caught in a trap that we can't escape,” Day said last week. “I think that we're not seeing politicians address the fact that simply removing compounding interest and allowing for a flat fixed rate interest, and a one-time fee would be better overall for policy.”
Halbert is optimistic that this program will continue the conversation into new policy.
“Going forward I think we need to focus on how we retain quality, affordable education in Hawaiʻi because we know that having access to higher education will improve your economic outcome going into the future,” she said. “So the more we can do to make it affordable, the better for everyone.”