In October, Pawtucket kindergarten teacher Kelly Beckford received an early holiday gift from President Joe Biden, whose administration wiped away $46,000 of her student debt, part of the Public Service Loan Forgiveness program that canceled debt for more than 3,100 Rhode Island borrowers and tens of thousands of others nationwide.
But for thousands more who took career paths other than public service and were hoping to benefit from more wholesale student debt forgiveness, it’s likely they will take their debt load into the new year and beyond after court challenges by Republican-led states and Supreme Court rulings have stalled most of Biden’s more ambitious plans to outright cancel tens of thousands of dollars for millions of borrowers.
That includes his proposal to cancel $10,000 in debt for anyone making less than $125,000 a year or households making less than $250,000, and the so-called “Plan B” for those who began repayment decades ago.
In 2019, more than 133,000 Rhode Islanders had a combined $4.5 billion in student loan debt. More than $470 million of that was delinquent. Since then, nearly $160 billion of student loan relief has been provided nationally during Biden’s tenure – including $378 million for 8,750 people in Rhode Island.
Whatever the outcome of the court cases, knowledge of this complicated loan labyrinth will be even more important for the next generation, says U.S. Sen. Jack Reed, D-R.I., who recently hosted an annual college financial aid workshop to give students and families information about scholarships, grants, loans, federal tax benefits, and the Free Applications for Federal Student Aid.
“For many Americans, taking out student loans to pay for college is the first big financial commitment that they will make,” he said.
The average cost for a four-year private college in Rhode Island has risen 30% since 2014 to $64,274, the third-highest rate increase in the country. Add to this the fact that interest charged on federal direct loans is set to reach 6.5% because rates are based on the auction prices for long-term U.S. Treasury notes, now at 15-year highs leading into the 2024-25 academic year.
Those aspiring to higher education will need to lean more on organizations such as the Rhode Island Student Loan Authority, long-championed by U.S. Rep. Seth Magaziner, D-R.I., which offers 4.45% interest rates and refinanced approximately $52 million in student loans for 1,040 borrowers during fiscal 2024. That saved them on average over $17,600 in interest costs over the life of the loans, the authority says.
Magaziner, who served on the RISLA board for eight years as state treasurer, believes despite the vitriol in Washington, D.C., there is still a bipartisan appetite to address the costs of higher education.
Indeed, Magaziner recently co-sponsored bipartisan legislation with Vice President-elect J.D. Vance to discharge debt burdens on parents with students with disabilities.
But the first-term congressman understands the growing fear that Donald Trump’s administration may try and push the legislature to axe programs already authorized by Congress, such as Public Service Loan Forgiveness or income-driven repayment, which Magaziner said would be “a grave mistake.
“These programs allow millions of Americans to pay off their debts through service and through flexible payment plans,” he said, suggesting Congress instead cap interest rates on federal student loans to match the rate at which the federal government borrows.
But polling suggests not everyone is sympathetic to the plight of borrowers with student loan debt.
Newport resident Ryan Coleman for years worked countless late nights behind the city’s downtown bars to pay for student loans he took out to attend Saint Anselm College, refinancing twice after graduation to bring his monthly payment down to a manageable level.
Now an employee with the Newport Water Division, Coleman has one message for borrowers who were hoping their debt would be wiped off the books: “Pay what you owe.”
But Coleman agrees there is a systemic issue.
“What I paid seems reasonable now,” he said. “I think the cost of school is insane, especially since wage trends haven’t followed suit.”
Reed says that until the Supreme Court makes its decision, many more targeted reforms can partially fill the gap, as can executive actions taken by the administration to combat servicing errors and failures in accounting by loan contractors that prevented many borrowers from receiving the debt cancellation or payment reductions they were entitled to under the law.
“This wasn’t free money. It was righting a wrong,” he said. “As the courts continue to review other aspects of the Biden-Harris administration’s student loan forgiveness programs and with an incoming administration that may want to reverse them, it is time for Congress to enact legislation that will provide a fair solution that helps reduce the tremendous financial burden that too many borrowers still carry.”
