Jarod Rhymes could finish his education without any debt after an announcement Wednesday from the White House signaled that his undergraduate student loans will likely be forgiven.
“That money that I would be using for federal loans will probably go straight to housing,” said Rhymes, who is a graduate student at the University of Illinois at Chicago studying urban planning and policy. “It’s going to help me live a little bit better, help me work a little bit less.”
Rhymes, 23, owes about $8,000 in student loans that he believes will be canceled under the new relief program. He said that figure is nominal compared to the $20,000 to $30,000 that other friends and relatives owe after graduating from college.
“Mine aren’t that big, but I’m still happy because it’s a burden on everyone,” he said. “Hopefully, more of it gets taken away for people with larger loans. It’s a step in the right direction for sure.”
President Joe Biden’s long-awaited student loan relief plan was announced Wednesday, and many students across the Chicago area are hopeful that at least some of their college debt can be canceled if they qualify.
Individuals who paid for some of their undergraduate tuition with Pell Grants could be eligible to get up to $20,000 in debt cancellation if the loans are held by the U.S. Department of Education.
Those who did not receive Pell Grants could be eligible for up to $10,000 in debt relief. Individuals seeking relief must have an individual adjusted gross income below $125,000, or not more than $250,000 for married couples.
The student loan debt crisis has hit Black college graduates hard: they owe an average of $25,000 more in loans than white college graduates, according to theÂ Education Data Initiative. Black college graduates have an average of $52,000 in student loan debt, the Initiative determined.
The weight of student loans has also impacted Latino college graduates, with about 33% saying they have put off getting married, according to the Education Data Initiative. About 37% of Latino borrowers said they have also delayed having children.
The Biden administration acknowledged that reality Wednesday in announcing the debt cancellation.
“Earning a college degree or certificate should give every person in America a leg up in securing a bright future,” said U.S. Secretary of Education Miguel Cardona in a news release Wednesday. “But for too many people, student loan debt has hindered their ability to achieve their dreams — including buying a home, starting a business, or providing for their family. Getting an education should set us free; not strap us down.”
Loan payoff pressure eased
N’dia Herndon, who is studying marketing at the UIC, said she was filled with stress after her parents last year told her she had racked up about $10,000 in student loans so far. She won’t finish her undergraduate degree until the spring of 2023, and she had so far only managed to save about $3,000 to repay the loans.
But the news that $10,000 in student loans could be forgiven is already shifting the way she thinks about her future.
“It’s just going to make me start thinking differently of how to use my money, because right now, as a student, I’m just constantly thinking ‘I need to pay off the loan, I need to find a job to pay off the loan,’” she said. “But having less to pay for, it’s like, OK, now I can really start thinking where can I live after I graduate? What can I save up?”
Herndon, 22, wants to work abroad after she graduates from UIC, and she said having the debt of a loan has made her more conscious about saving for the future.
But others, like Rocio Pulido, 29, of Pilsen, think the new relief program doesn’t go far enough. She called it a drop in the bucket — especially for friends who are approaching their 30s and have not been able to reach other life milestones besides getting an education.
“Especially for first-generation college students, students of color, student loan debt makes such a difference in how we live our lives and what we are able to achieve,” Pulido said.
“I turn 30 this year, and a lot of us have not been able to purchase a home or meet those milestones that we thought we would be able to by the time we turned 30 years old,” she said.
Saving for a home, to assist family
Pulido graduated from Valparaiso University with about $42,000 in private and federal student loans. Before the coronavirus pandemic, she paid about $500 a month toward the loans.
She paid off one of her private loans — that had a high-interest rate — during the coronavirus pandemic, and she now has about $20,000 in loan debt. Because she was a recipient of Pell Grants during college, she believes about $16,000 of her debt could be canceled under the new program. One loan, with an outstanding balance of about $4,000, may not be eligible for cancellation. She earns less than $125,000 annually.
“I consider myself to be one of the luckier folks because I don’t think that my debt was as high in comparison to a lot of my friends and classmates that I graduated with,” Pulido said.
She plans to start saving toward buying a home with her partner, and saving up money to help her parents with family emergencies if most of her remaining student loan debt is forgiven.
In the past, she had considered attending law school, but she believes she can accomplish what she wants to in her current work with immigrant communities at the Resurrection Project.
“The costs have really skyrocketed,” Pulido said about attending college. “I don’t know if it would be worth it anymore at this point in my career.”
Given his family’s financial circumstances, Luis Perez, a 27-year-old athletic trainer who lives in Elmhurst, knew he would have to take out loans to complete his undergraduate education. After two years at DuPage Community College and three more at Northern Illinois University, Perez had accrued about $54,000 in federal and private loans.
He graduated with a bachelor’s degree in athletic training and was able to get a job right out of college, but when the pandemic hit, he — like many others — was furloughed.It was only because of the freeze on federal loan payments that Perez said he was able to “get back on his feet,” he said.
Perez said he has been campaigning for student loan cancellation since graduation, signing online petitions and spreading the word to family and friends.While Wednesday’s announcement was not as much as Perez was hoping for, he was still very excited by the news.
“I just got married and am looking to buy a home,” Perez said. “It just gets me one or two years closer to that.”
Any debt relief helps
Bridget Lynch, 21, will head into her junior year at Wellesley College — an all-women’s school in Massachusetts — this fall.
The Orland Park native expects to graduate with close to $30,000 in student loan debt, owed mainly to the federal government.
Under the policy, current students would be eligible for relief only for loans that originated before July 1 of this year. Lynch said any relief helps open hope for the future.
“It definitely opens up more thoughts about graduate school and just living post-college,” Lynch said. “It’s not just about the $10,000 … but it’s about the $10,000 in debt that’s not going to accrue compound interest over the next 10 to 20 years of my life.”
Elvia Malagón’s reporting on social justice and income inequality is made possible by a grant from The Chicago Community Trust