Nevadans react to Biden’s student loan forgiveness

Indebted students welcome ‘more manageable’ outlook; Laxalt calls it a ‘bailout’

By: and - August 25, 2022 5:33 am

The median student loan debt in Nevada is $16,447. (Nevada Current file photo)

Around 330,000 Nevadans are saddled with more than $11 billion in student debt

After President Joe Biden announced Wednesday he will cancel up to $20,000 in federal student debt for Pell Grant borrowers and up to $10,000 for individuals earning less than $125,000 a year, or $250,000 as a household, some who have dealt with unpaid debts are feeling a little relieved. 

Biden also announced he will extends the pause on student loan repayments until Dec. 31, and revamp income-driven repayment plans to guarantee no borrower earning less than 225% of the federal poverty level, which is equivalent to the $15 minimum wage, will have to make a monthly payment.

“I’m super grateful for this,” said Shelbie Lynn Swartz, who said she is paying back $70,000 of student loans. “This is a matter of putting money back in folks’ pockets essentially. Nobody can ever be 100% happy with what an elected official does, let alone the president. But I think this is a really great step forward.”

In a Medium post during the 2020 presidential election, Biden said under his administration he would “forgive all undergraduate tuition-related federal student debt from two- and four-year public colleges and universities for debt-holders earning up to $125,000, with appropriate phase-outs to avoid a cliff.” 

He also promised he would “immediately cancel a minimum of $10,000 of student debt per person,” but Wednesday’s announcement comes two years into his administration and only after continual pressure from congressional Democrats and advocates.

Despite numerous reports in recent weeks that Biden would take action on student loans, the White House had remained silent, but on Wednesday the president tweeted out his decision, prior to his remarks.

“In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023,” Biden wrote on Twitter.

Following the announcement, the Department of Education said it will release an application in the weeks ahead that will allow millions of borrowers to claim relief. 

“Student loan debt has hindered their ability to achieve their dreams — including buying a home, starting a business, or providing for their family,” U.S. Secretary of Education Miguel Cardona said in a statement. “Getting an education should set us free; not strap us down!”

The cancellation of student debt will only apply to current borrowers, not future ones, and income levels for the 2020 and 2021 tax years will be considered, a senior administration official said during a Wednesday call with reporters. 

The Department of Education estimates that about 8 million borrowers will automatically receive relief because the agency already has those borrowers’ income information on file. That means those borrowers do not have to submit applications.

Borrowers who received Pell Grants, who will benefit from the most relief, are among the students who had the lowest household incomes while in college. They will also be subject to the $125,000 and $250,000 income caps. 

“No high income household will benefit from this action, period,” Biden said. 

‘‘A lot more manageable’

According to 2020 data from the Urban Institute, the median student loan debt in Nevada is $16,447, and the median loan debt is $18,334 among white borrowers and $13,660 among communities of color. 

The organization estimates 10% of Nevadans are in default on student loan debt – 7% of white communities and 12% among communities of color. The median debt is $10,105. 

Nearly one in three UNLV students receive Pell Grants.

Swartz said she is thankful she will qualify for $20,000 in forgiveness. 

“And $50 grand is a lot more manageable and seems a lot less scary than $70 grand,” she said. 

After graduating from the Clark County School District, Swartz attended Northwestern for her undergraduate degree in journalism. She went on to get her masters from Johns Hopkins University. 

She said while her family wasn’t broke, she entered college in 2012 while the recession was winding down. While a significant part of her school was covered through other forms of financial aid, including grants, she struggled to afford housing, which contributed to  her taking on student loans. 

“You’re in school and you don’t really think about it,” she said. “You got yourself there, you figured out a way to get there. You’re not thinking that 10 years down the line you’re going to be making payments with no end in sight.”

Her first job was working as a “young, broke journalist.”

“I’m here, I’m working and I’m using my degree, but now I’m paying for it as well,” she said.

The last two years student loan payments were paused due to the pandemic, Swartz was able to not worry about the monthly strain on her budget.

“It’s been really freeing,” she said. “I’ve been able to use the money I make to buy a house. I’ve been able to save. I’ve been paying for my wedding. I’ve been able to put that money to good use with these life milestones that I wouldn’t have been able to if I was paying $500, $600 in payments a month.” 

Malena DiMaggio of Las Vegas, who is looking at $50,000 in student loan debt, said she should at least qualify for the $10,000 cancellation, but is unsure if she is eligible for additional forgiveness. 

“I definitely think today is a victory but unfortunately we still have to understand there are still a lot of people who don’t qualify and the loan forgiveness doesn’t cover the full amount for a lot of people,” she said. “A lot of people were told we should be going to school and getting these masters and doctorate degrees and in return it will help us make a lot of money. Yet, it’s the opposite. We are swimming in a lot of debt.”

DiMaggio received her bachelor’s degree in social work from UNLV and just graduated with her masters degree.

“I am the first person to graduate in my immediate family with my undergraduate degree and I was the first person to go for my masters degree,” she said. “I didn’t have much financial support going through that process and it was very expensive.”

Even though she is grateful to have a reduced amount to pay back once payment resumes, she is still facing at most $40,000 of debt.

“I definitely think this is a step in the right direction,” she said. 

‘Huge economic barrier’

In addition to forgiveness, the Biden administration is also directing the Department of Education to propose a rule to help current and future borrowers with their loan repayments. 

The rule would eliminate monthly interest  payments on loans, “so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments — even when that monthly payment is $0 because their income is low,” according to the department website.  

The proposed rule would also forgive loan balances “after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.” It would also require “borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans.”  

“Middle class borrowers struggle with high monthly payments and ballooning balances that make it harder for them to build wealth,” a senior administration official said.

Democratic lawmakers have praised Biden’s actions while GOP lawmakers sharply criticized the cancellation move.

U.S. Rep. Dina Titus said Biden’s action will help in efforts more college higher education more accessible,
“especially women and people of color who are disproportionately harmed.” She added that making higher education more affordable is an investment in the next generation. 

“As a professor at the University of Nevada, Las Vegas for 35 years, I had the privilege of teaching some of the best and brightest in our state,” she said. “Far too often, however, I witnessed promising students left with no choice but to drop out of school and abandon their educational and career goals because of financial hardships.”

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said in a statement the move was a “slap in the face to every family who sacrificed to save for college, every graduate who paid their debt, and every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt.”

Nevada Republican Senate candidate Adam Laxalt on social media echoed McConnell’s statement, calling the Biden administration move  a “massive bailout” and “an insult to all the parents who saved up to send their kids to college.”

Laxalt’s opponent, Sen. Catherine Cortez Masto, told the Nevada Independent that she objected to the Biden debt cancellation because “it doesn’t address the root problems that make college unaffordable.” Cortez Masto called for expanding Pell Grants for lower income students and policies designed to “target loan forgiveness to those in need.”

A Penn Wharton budget model released Tuesday found that a one-time loan forgiveness of $10,000 in the Biden debt relief program would mostly benefit borrowers in the four lowest quintiles of incomes.

Will Pregman, the communications director with Battle Born Progress, pushed back on suggestions the debt cancellation will only benefit those with higher incomes, saying everyday folks with college debt are breathing a sigh of relief.

“If you talk to regular folks who have student loan debt, it’s not a situation where it’s necessarily comfortable where a substantial portion of their income goes to paying off their student loans,” he said. “Not only does having that debt make it harder to achieve homeownership or get good credit, it’s just a huge economic barrier for people.”

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Michael Lyle
Michael Lyle

Michael Lyle (MJ to some) has been a journalist in Las Vegas for eight years.  He started his career at View Neighborhood News, the community edition of the Las Vegas Review-Journal. During his seven years with the R-J, he won several first place awards from the Nevada Press Association and was named its 2011 Journalist of Merit. He left the paper in 2017 and spent a year as a freelance journalist accumulating bylines anywhere from The Washington Post to Desert Companion. While he covers a range of topics from homelessness to the criminal justice system, he gravitates toward stories about race relations and LGBTQ issues. Born and mostly raised in Las Vegas, Lyle graduated from UNLV with a degree in Journalism and Media Studies. He is currently working on his master's in Communications through an online program at Syracuse University. In his spare time, Lyle cooks through Ina Garten recipes in hopes of one day becoming the successor to the Barefoot Contessa throne. When he isn’t cooking (or eating), he also enjoys reading, running and re-watching episodes of “Parks and Recreation.” He is also in the process of learning kickboxing.

Ariana Figueroa
Ariana Figueroa

Ariana covers the nation's capital for States Newsroom. Her areas of coverage include politics and policy, lobbying, elections and campaign finance.