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Student loan relief ‘would be fantastic’ as debt soars past a trillion

Ferris State Univ. official says most popular proposal from President Elect Joe Biden, new administration would be giving debtors $10,000 in loan relief
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Student loan relief ‘would be fantastic’ as debt soars past a trillion
Posted at 8:09 PM, Dec 10, 2020
and last updated 2020-12-10 20:31:56-05

BIG RAPIDS, Mich. — For Erica Foote, going to Ferris State University was an easy choice. Most of her family went to Michigan State University in East Lansing. However, when Ferris offered her a $6,000-a-year scholarship, she moved to Big Rapids. So far, she’s loved it.

“I’m happy with my choice. I’m third a generation Ferris student. My grandpa owned a pharmacy. My dad started pharmacy school,” Foote said during a Zoom interview on Thursday. “So, that’ll be kind of cool but definitely they weren’t in the same amount of debt coming out as all of us are going to be.”

Foote is a second-year graduate student studying pharmacy. Thursday afternoon, she checked on the school’s website for an estimate of how much she currently owes them in loans and it read $98,487. Since she has a few more semesters to go, she said that number will increase to well over $200,000 once interest is factored in.

“That’s insane. I know that with pharmacy school, I’m going to be making a decent amount of money, but $208,000, plus I have another two years after this,” Foote said. “For people my age especially, you know we don’t think about it as much but if you actually sit down and try to crunch some of those numbers, it’s like I don’t even [know]. I know my older sister when she was doing hers, they basically said the only way for you to pay it off after your master’s program is like ‘pay this much money or death.’”

Ferris State dean Kristen Salomonson understands. Student loan debt is in the trillions. She said 90 percent of the loans that people carry stem from some type of federal loan, and on average people owe $36,000. She noted that starting salaries can’t compete with the amount of debt people owe when they graduate college. However, she believes the renewed talks of student loan debt relief or forgiveness may come to fruition.

“It would be fantastic if there could be some relief” Salomonson said. “The upcoming administration and other Democratic senators and other interest groups have proposed changing some of the ways that we handle student debt here and in particular sort of canceling debt. Right now the most popular program that they’re sort of touting, what they want is to just give everyone $10,000 in loan relief.”

READ MORE: Biden’s student loan forgiveness could wipe out debt for 15 million borrowers

Salomonson said that if that happens it will immediately boost the economy because the dollars will go to the communities and not just back to the government. The $1200 stimulus check people received early in the pandemic mainly helped with necessities like rent and groceries, she said. However, a $10,000 check will boost consumer spending.

“When you’re young and you’re establishing your career there’s a lot of things to buy. You’re starting families, you’re making decisions,” Salomonson said. “Life costs money, if you gave more of it you’re able to be more flexible. So, I think it could really be boon for everyone.”

Salomonson added that President Elect Joe Biden has also mentioned extending the current forbearance well into 2021. It was recently extended from December 31 to the end of January. However, many are hoping he extends it further.

READ MORE: Federal student loan forbearance given additional extension

“Another program that Biden has put into some of his campaign materials is limiting the amount of money that students would have to pay on their loans,” Salomonson said. “So, if we don’t go the direction of basically erasing some debt, is there ways to give people some relief in debt payments. Right now, the average federal loan, it depends on what program it is, they require you pay between 10 and 20 percent of your discretionary income per month, which is quite a big chunk.”

However, many people don’t have discretionary income after paying bills, loans and other necessities, she said. So this proposal would cut that to five percent.

Salomonson added that the proposals will not help everyone, especially people who have already paid off their students loans, those currently in undergraduate programs or entering school, and those with private loans. The proposal support federally-backed loans.

However, colleges and universities are always considering ways to keep the costs of their institutions affordable, she said. Currently most schools in the state, including Ferris State, are 75 percent funded by tuition, she said. Prices have gone up as state funding has decreased.

“As that has gone down, inflationary increases has kept the cost of higher education high,” Salomonson said. “Right now the current climate is very much questioning the value of college, talking about ‘wow these are a lot of dollars.’ Credible study after credible study indicates that it’s still a terrific investment.”

Foote agreed. She’s been enjoying her years at Ferris. However, she hopes something is done soon. Even the smallest amount of relief helps, she said.

“What I’m understanding is that would be for undergrad type student debt. So, that’s really cool if I could just knock that off,” Foote said. “I know I didn’t have as much in undergrad as I do for grad school but not having to worry about that would be amazing. Even if it’s not your whole debt wiped, even having like $100 knocked off a month when you graduate, that’d be super nice.”