Her main objective after that, she says, was to go back to school and “learn how to work computers” so she’d be qualified for “more of an office-setting-type job.” As a single parent, she needed the loans to help with everyday bills as well as books and classes.
But now, she says medical issues make it unlikely she can work full-time and earn enough money to ever repay the debt in full. “I just don’t see a way out.”
Unlike many types of debt, there’s no way out of student loans via bankruptcy. Federally backed ones are dischargeable in death, so they don’t get passed on to loved ones.
Retirees who still owe money can find loan repayments getting deducted from their social security income. In fiscal year 2019, the last full one before the pandemic freeze, the Department of Education recouped $4.9 billion from benefits due under government programs.
That’s helped make student debt a talking point at retirement homes as well as college bars.
In The Villages, for example, a vast age-restricted community in central Florida, the median loan balance rose to $17,921 at the end of 2019, from $11,110 a decade earlier. Before the pandemic forbearance, one in eight borrowers there was severely delinquent, according to the Philadelphia Fed’s Consumer Credit Explorer.
When payments fall due again on Oct. 1, more may struggle to pay. It’s not clear if the government will have taken any steps toward debt writedowns by then.
Biden promised to forgive as much as $10,000 of student loans per borrower. But the president says he’s reluctant to use executive authority to cancel the debt, as some fellow Democrats have urged him to do, and his administration hasn’t outlined an alternative strategy.
Topete, who’s not working right now, says she’s not sure how she’ll manage to make her payments once the Covid-19 freeze ends. Debt forgiveness would be a “blessing,” and if the administration isn’t going to do that then it should at least change the law so student loans are dischargeable in bankruptcy, she says. “I want to be debt-free going into my retirement.”
Sizer, the retired prison warden, says that he’s “very pessimistic” that loans will be forgiven, but the government should find a way to help reduce interest payments even if it doesn’t write down the principal. He says the U.S. college system is skewed toward those who can afford to send their children through it debt-free.
“Every parent wants their kid to be successful and to get the right start in life,” Sizer says. “If education is as important as everyone makes it out to be—which I agree with—there should be a better way to level the playing field.”
This article was provided by Bloomberg News.