As challenges to the Biden administration's student debt relief program move forward, the program stands to impact more than three-quarters of a million Missourians who could benefit from the loan forgiveness.
Missouri is home to 777,300 borrowers eligible to get some of their federal student debt canceled, according to data from the Biden administration. But this is only if the White House is able to thwart legal challenges attempting to halt the program.
Two days after the Biden administration published new data on eligible borrowers late September, Missouri and five other states sued in an attempt to halt the program, including Nebraska, Arkansas, Iowa, Kansas and South Carolina.
The lawsuit, filed in federal court in St. Louis, asked for an immediate halt of the program on the basis that it's economically unwise, beyond the scope of executive branch powers and unfair to those who chose not to take out loans or paid them off.
Oral argument for the lawsuit against the program is scheduled for this morning at the U.S. District Court for the Eastern District of Missouri -- and there is a possibility that court action could complicate the anticipated student loan forgiveness timeline.
Missourians weigh in
Many of Missouri's 777,300 eligible borrowers are eagerly anticipating the application's release this month, which has been stalled due to the lawsuit. Others have echoed concerns brought to light in the lawsuit.
Antonio Lewis graduated from Lincoln University in 2011 with a bachelor of science in political science, a handful of accolades and an exorbitant amount of debt. Eleven years later, Lewis serves as a city council member in Atlanta, Georgia, and still has $60,000 worth of debt.
"To me, the 'great equalizer' really is education," said Lewis, invoking the famous 1848 phrase coined by American education pioneer Horace Mann.
Lewis' mother was murdered when he was 3 years old, and his father was in and out of prison. To Lewis, education was a pathway toward stability.
"But education costs so much money," he lamented. He said he was elated when he discovered he'd be eligible for the student debt cancellation program. As a Pell Grant recipient, Lewis would be eligible to see $20,000 wiped from his student debt.
According to the Biden Administration's announcement of the program, those with incomes of less than $125,000 (or less than $250,000 if they are married) in either 2020 or 2021 will be eligible for $10,000 in cancellation. Borrowers who received federal Pell Grants to attend college can receive an additional $10,000.
In Missouri, Pell borrowers make up 65 percent of the total eligible borrowers, according to the White House.
Ben Hindman from California, Missouri, graduated from State Fair Community College in Sedalia. He decided to attend based on the school's affordability. He'd considered other schools that were more expensive but decided against attending them since he wasn't sure yet what he wanted to study.
Hindman supports the legal challenge to the student debt forgiveness program and sees canceling student debt as promoting and excusing irresponsible decision making.
"I don't think it's justifiable because it's immoral to borrow and not pay back the loan. That's a core value where I'm from," he said. "I get that education is expensive, I really do, but there are scholarships to help elevate people."
Hindman, almost 30, understands it's hard to make sound financial decisions when you're 18 or 19 years old. He said there needs to be better education opportunities to help young people in high school fully understand their options.
"With hyperinflation right now, this was the absolute last thing we needed to do. If they really wanted to fix the problem, they should have put a cap on interest rates to help people pay them off, instead of just wiping it out," Hindman said, echoing some of the arguments raised in the lawsuit against the program.
Missouri Attorney General Eric Schmitt, one of the five attorneys general helming that lawsuit, said in a statement that the decision is "not only unconstitutional, it will unfairly burden working class families and those who chose not to take out loans or have paid them off with even more economic woes." He continued to say the program will only worsen inflation at a time when many Americans are struggling to get by.
J'Aysha Chambers works for the Department of Veteran Affairs now, but when she graduated from Lincoln in 2004 with a masters degree in public administration, the job market was tight.
"When I finally did find a job at a nonprofit, it didn't match my skill level or pay enough for me to pay off my loans. I spent a long time getting paid under my value," said Chambers, who is also a Pell Grant recipient.
While Chambers was getting her finances to a place where she could pay her loans back, she had to defer payments, which continued to grow her debt due to interest.
If you're granted a deferment, you might still be responsible for paying the interest that accrues during the deferment period.
Student loan deferment allows borrowers to pause making payments on their loan for up to three years. Federally subsidized loans don't accrue interest during the deferment but unsubsidized loans and many private student loans do accrue interest, which gets added to the loan at the end of the deferral period.
"The $20,000 doesn't even cover what I have accrued in interest. It's a rat race that you can't get out of," she said.
"Not everything's cut and dry. Not everyone's lazy and looking for a handout. I feel like I did what I was supposed to do. I went to school, and I've worked in public service ever since. For those who were able to pay off their student loans in a timely manner, kudos to them, but don't be mad because other folks need help."
Angela Martin, who works as an administrative assistant at Lincoln University and is an alum, said she's worried about being able to afford groceries when the moratorium on student loan repayments ends in January, especially with inflation.
"We saw people with plenty of money take advantage of the PPP loans, and those were all forgiven."
The federal government's Paycheck Protection Program (PPP), passed early in the pandemic, guaranteed loans to small businesses in an effort to help them make payroll when business was down due to the pandemic. Most businesses, if they followed the parameters of the loan, did not have to pay back the loans. But the program culminated in more than 100 criminal cases of fraud, alongside public outrage when large corporations got loans while others were left on the sidelines.
'Skeptically optimistic'
Among experts and supporters of the program, plenty of confusion and trepidation remains.
There's still much unknown about the program and how it will play out, said Jessica Duren, assistant commissioner for communications and outreach at Missouri's Department of Higher Education and Workforce Development.
Student debt cancellation will be handled entirely by the federal government, but Missouri's Department of Higher Education and Workforce Development has received an influx of questions about student loans since the program's announcement.
Questions remain over how it will play out and how the cancellation might affect incoming and future students' borrowing decisions.
Duren said they've received numerous inquiries related to the growing presence of scams seeking to take advantage of the confusion about student debt forgiveness. Duren encouraged people to double check they're getting information from the federal government.
Duren also said many have had questions about the Fresh Start Initiative, which would allow borrowers with loans in default to re-enter current repayment status and restore other federal student aid benefits.
Lincoln student Baylee Freeland said she has been confused since the announcement about how the program will work, when applications will open and whether she'd even be eligible.
The application hasn't yet opened, but interested people can learn more and sign up for notifications about the application on studentaid.gov. The site clarifies that current college students can qualify as long as the loans were taken out before July 2022.
According to the Education Department, the student loan forgiveness application will be simple, short and easy to complete. No supporting documentation will be required.
Overall, Missouri's student loan debt reached $29.3 billion in April of 2022, according to the National Center for Education Statistics (NCES). The average borrower debt in Missouri is $35,397.
"We recognize that this will help a lot of people," Duren said. "But we also recognize that there are continued issues with students taking out too much in loans."
She said the department is working to promote factual information about the program, as well as continue to help students make smart borrowing decisions as they enter college and continue throughout their college career -- to not bank on this happening again.
With the cost of higher education increasing significantly over the years, she said it's important for prospective students to seek out information about how much jobs are paying, available on the Missouri Economic Research and Information Center's website. She said students should also examine each institution's website for information on scholarships, as well as net price calculators, which every institution is required to post on their websites.
Many of the department's own scholarships can be obtained by filling out the Free Application for Federal Student Aid, FAFSA, which opened Oct. 1.
"We know that going to college isn't just about earning a paycheck. There are other social and personal benefits, and we don't want students to have to solely decide on cost. You could enter into a job that you hate, and your life might not be as fulfilling. But we do want students to understand what they're getting into. It's still a huge financial decision," Duren said.
Compared to other states, Missouri institutions have kept their costs relatively lower, Duren said. "And that's huge for our students who are not necessarily paying as much as they would be if they lived elsewhere."
Sabby Resuma, also a political science student at Lincoln and a Pell Grant recipient, said she's "skeptically optimistic" about the program, citing both the legal challenge and the uncertain political landscape heading into the midterms.
"I know plenty of people, including myself, who have been really affected by their student loan debt. You can't necessarily move and laugh in the way that you want to," Resuma said.
"I really hope he's serious about it. But I won't be holding my breath," she said. "When it comes to things like this, expect the unexpected."