6 in 10 Nevadans with student loans can’t make payments, survey says

Congressional failure to act in relief bill leaves borrowers in the lurch

By: - December 31, 2020 6:40 am
On the hook

(Getty Images)

Stacey Shadoff found herself unemployed after the Dress Barn, where she worked part-time as an assistant manager, closed down toward the end of December last year. Two month later any hopes of quickly finding another job were dashed after a statewide shutdown of nonessential businesses was put in place due to the quickly spreading coronavirus.

On top of losing her job and concern for her elderly mother’s future health, Shadoff had another worry: her $220,000 in student debt.

“I don’t think I fully knew 100 percent what I was getting myself into,” Shadoff said. “I wasn’t prepared for everything later on. If I understood better I would have made different decisions.”

The previous COVID-19 relief bill temporarily suspended federally held student loan payments —along with interest — but the latest package offers no such relief, meaning that starting in January borrowers will have to begin paying back loans.

Shadoff is one of more than 43 million American borrowers left in debt even as 22 million jobs were lost due to the economic fallout of COVID-19, jobs that will likely take years to come back.

Early signs hint that the economic outlook for student loan borrowers is bleak.

A national survey of nearly 60,000 student loan borrowers in all 50 states from Nov. 30 to Dec. 4, 2020 found that three-fourths of respondents are not financially secure enough to begin making student loan payments again until June 2021 or later. 

The survey by Student Debt Crisis, the nation’s largest student debt advocacy organization, and Savi, a social impact technology company, revealed that while short-term federal relief was generally helpful to borrowers, most are facing long-term challenges that will remain for months or years to come.

In Nevada, a state with one of the highest unemployment rates in the country, about 63 percent of respondents said they have either defaulted on a student loan or have not been able to make monthly student loan payments since the pandemic started.

Nearly 68 percent of respondents in Nevada said they either lost their job, had hours reduced, or were furloughed due to the pandemic. More than half of the respondents rated their financial wellness as poor or very poor.

In the past decade, student loan debt has doubled, according to data from the Federal Reserve, growing from $855 million in collective debt to $1.7 trillion.

That debt is now following Americans as they age. Older Americans — ages 65 and over — were the fastest-growing demographic of student loan holders, according to a government report from 2016. Borrowers age 50 and older have considerably higher rates of default on federal student loans, according to the report.

Shadoff, 49, started school later in life and graduated from the University of Nevada, Las Vegas in 1998 with a degree in Psychology before obtaining a masters degree in marriage and family therapy from the University of San Diego in 2000.

The private and federal student loan debt she incurred from those degrees have followed her for 20 years. What started off as a little over $100,000 in debt later ballooned to $220,000 padded by interest and the debt collector’s costs.

“You don’t make enough to pay back anything directly out of school and by the time you get a chance you have all these added penalties and interest you didn’t have. Nobody graduates college and immediately becomes a CEO,” Shadoff said.

Shadoff became a social worker but soon left because of burnout and low pay that could not cover her student loans and living expenses in San Diego.

“I found that I didn’t want to do social work anymore. Part of the reason is it’s just heartbreaking. I couldn’t do it anymore,” Shadoff said.

A career in human resources followed in which she worked with major companies like Station Casinos, MGM Resorts International, and AutoNation. For a while she worked high paying jobs as the HR director of Seven Hills Hospital and as an HR consultant for Dignaty Health but degenerative disk disease and major surgery left her unable to work full time.

Shadoff attempted to get on an income-based repayment plan to manage monthly loan payments but that still required her to pay $600 a month she couldn’t afford to pay along with rent and childcare for her daughter.

“It’s embarrassing and I’m ashamed that it’s gotten this bad,” Shadoff said. “My debt to income ratio is out of control.”

In 2018-19, 46 percent of Nevada college graduates had student loan debt, according to the Institute for College Access and Success. The average debt load of a Nevada college graduate in 2018-19 was $21,254, the third lowest in the nation. 

However, about 10 percent of Nevada college graduates’ student loan debt was private, nonfederal debt that is often costlier and carries fewer consumer protections than federal debt.

Calls to cancel student debt have grown during the pandemic as millions have lost jobs and had hours cut. President-elect Joe Biden has already backed a plan to provide $10,000 in student loan forgiveness due to the pandemic. 

Advocacy groups, like Student Debt Crisis, have called for more, arguing that through executive action Biden could wipe out federal loans not just by $10,000, but $50,000 or even all of what borrowers owe.

“A huge problem we’re seeing is that while we see the cost of college go up we are not seeing an increase in salary,” said Natalia Abrams, director at Student Debt Crisis.

In Nevada, the most common professions with student loan debt according to the Student Debt Crisis survay were Educational Services ( about 21 percent) and Health Care and Social Assistance (28 percent), professions with high professional and degree requirements.

“What we’re seeing is student debt finally getting the national spotlight that I think it really deserves,” said Lindsay Clark, director of external affairs for Savi. “We’re finally seeing national conversations around this issue.”

“Behind the numbers are people who are struggling to pay rent and struggling to put groceries on their table.”

In Nevada, about 20 percent of student loan borrowers said they have experienced food insecurity since the start of the pandemic, according to the survey. Two-thirds of respondents said they are facing increased anxiety, depression, or stress due to the burden of student loans. 

Another worry is that once the suspension on student loan payments ends, defaulted student loans will be eligible for wage garnishment. 

“Unless something is done we are going to see borrowers who are going to go into default because they can not pay student loans and we’re going to see a downward spiral from there,” Clark said.

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Jeniffer Solis
Jeniffer Solis

Reporter | Jeniffer was born and raised in Las Vegas, Nevada where she attended the University of Nevada, Las Vegas before graduating in 2017 with a B.A in Journalism and Media Studies. While at UNLV she was a senior staff writer for the student newspaper, the UNLV Scarlet and Gray Free Press, and a news reporter for KUNV 91.5 FM, covering everything from the Route 91 shooting to UNLV housing. She has also contributed to the UNLV News Center and worked as a production engineer for several KUNV broadcasts before joining the Nevada Current. She’s an Aries.