Student debt haunts Americans from graduation to retirement

Student debt haunts Americans from graduation to retirement

Going to college should be a path to a better life. But the cost of getting a degree has become a financial burden, burdening borrowers from the day they graduate to the day they retire — if retirement is possible.

Student loan debt is a burden that nearly 3 in 4 American borrowers say has forced them to put off major life events — whether it’s buying a home, having children or getting married, according to the Gallup Lumina Foundation’s latest Cost of College report.

“I had to put aside all my dreams and focus on living day to day,” Jes Evans, 35, told CNN. He earned a master’s degree in religious studies in 2017, with dreams of teaching at a college. But he was unable to find work in his field when he graduated and struggled to find work in other areas where he lacked experience.

Evans, who now works as the director of youth programs and communications at a church north of Pittsburgh, feels trapped by her debt, which she pays $940 a month.

“It feels like you’re treading water your whole life … I can’t travel, I can’t have a family because I can’t afford it. It’s just hard work.”

Evans is far from alone.

Dozens of people who responded to CNN’s prompts on social media this week said their student debt has hurt their credit scores and reduced their incomes. Many who responded said they were close to retirement age but could not imagine being able to stop working, saying they would take their debt to their grave.

“Cost is the No. 1 issue when people say they won’t pursue postsecondary education,” said Courtney Brown, who has led the Gallup Lumina study for the past four years.

“When people have this debt, not only do they not have children, they don’t buy houses, they don’t start their own businesses,” Brown said in an interview. “And that’s going to be a problem – we need our local businesses, we need innovation, and that’s another thing that’s going to hurt us.”

One in 3 students in the United States currently enrolled in college or other post-secondary programs say they have considered dropping their coursework in the past six months, a Gallup Lumina survey found. Among them, 31% blamed cost – the third most cited factor behind emotional stress and personal mental health reasons.

“People want to get a degree — not because they don’t value it,” said Brown, vice president of impact and planning for the Lumina Foundation, a nonprofit that aims to increase participation in education beyond high school. “I think they’re getting frustrated, not only because the cost is too high but it’s confusing to understand how much it costs.”

Debt relief limits
Spinning tuition costs have begun to change the narrative around the value of a college degree. In 2015, more than half – 57% – of Americans had “a lot” or “somewhat” confidence in higher education, according to a separate Gallup study. Last year, the figure hit a new low of 36%. The Gallup study did not focus on the cause of eroding confidence, but it said that rising costs “likely played a significant role.”

Part of the problem is the scale of the U.S. higher education system, where hundreds of nonprofit colleges compete for enrollment and talent, and the vast majority of upper- and middle-class parents are willing to pay top dollar — or go into debt themselves — to provide for their children. the best education.

Some critics of the Biden administration’s student loan forgiveness plan say that eliminating the debt doesn’t solve the root cause — and could actually encourage universities to raise tuition even further.

The White House has forgiven $153 billion in federal student loan debt, providing a financial lifeline to millions of borrowers.

When Josh, who lives in Oregon and asked CNN not to publish his last name, received an email from the Department of Education last week, he said his first reaction was, “What do they want now?”

But he soon learned there was good news: He was eligible for loan forgiveness.

“To read the words that I’m eligible now, having reached the monthly payment amount … I’m just blown away,” he said. “I can’t describe what it’s like to have a glimmer of hope that 24 years of struggle might be coming to an end.”

Josh said he didn’t allow himself to get his hopes up anymore, frowning will that there are already two lawsuits challenging Biden’s SAVE plan. But in the moments when she allowed herself to imagine her life without debt, she dreamed of finally buying a house with her husband.

Dream of retirement
While Biden’s total forgiven debt is $153 billion, it is less than 10% of the more than a trillion dollars in outstanding federal debt.

Since 2007, borrowers who work for government or non-profits have been able to ease their debt burden through the Public Service Loan Forgiveness program. But not all public sector workers are eligible.

Amy Coody, a social worker at a maximum-security women’s prison in Wetumpka, Alabama, said she is ineligible for the PSLF program because she works through a third-party contractor rather than directly by the state.

“Even though I was in prison and dealing with prisoners, they said that was not public service,” he said in an interview. “I’ve been paying off my loan for 21 years, and I won’t be able to retire at this rate.”

Borrowers who take out private loans or transfer their debt to a private lender to consolidate it are also not eligible for loan forgiveness.

That’s a bitter disappointment for Ralph Davis, a 64-year-old chiropractor from Savannah, Georgia. Davis said he doesn’t begrudge anyone who is fortunate enough to have their debt eliminated. But he couldn’t help seeing “some kind of essential injustice” in Biden’s program.

Davis graduated from chiropractic college in 1986, with about $30,000 in debt from federal student loans. At that time, he was advised to consolidate the debt through a private lender. He then racked up $40,000 in debt trying to get an additional degree through a for-profit college, though he eventually gave up on the degree when the college kept changing the curriculum to move the finish line forward.

But because Davis consolidated his debt through a private lender, he was ineligible for the federal forgiveness program.

He wasn’t mad about it, and he wasn’t expecting a magic wand to come and wipe out his debt. But he is aware of being sidelined, resigned to the reality that it may take another nine years before he can finally pay off his loan.

“I freely entered into this arrangement to advance my career – no one tied my hand and said, ‘sign here,'” he told CNN. “And I have faithfully since the day I finished my doctoral program in ’86, through education extra … even during a pandemic.”

But over the past four decades “basically, every penny I’ve paid has been in interest,” Davis said. “And of course, that tends to put the idea of retirement on hold a little bit.”