In 2001, Karen Herrera of Minnesota took advice from a Sallie Mae representative to consolidate her student loan debt with her husband’s. They both worked in the public sector, but due to their type of loans, they did not qualify for public service forgiveness. Herrera lost her job in 2009 due to the economic recession, and though the couple filed for bankruptcy, their student loan debts remained.
Herrera and her husband have continued to make monthly payments throughout the pandemic, as their loans through the Federal Family Education Loan Program were not eligible for the pause on payments.
Despite paying off the amount they took out, Herrera and her husband currently owe more than $74,000. “Our original principal was $46,575. To date, we have paid $73,283. Sixty thousand, three hundred and eighty-six dollars went to interest, and $12,897 went to the principal over 21 years,” said Herrera.
She’s currently hoping for congressional legislation that would allow her and other couples to separate their loans so they are eligible for public service forgiveness waivers.
Herrera is also one of millions of Americans awaiting some form of relief for their student debt as the Biden administration is currently mulling a decision on addressing student debt relief after extending the Covid-19 pandemic pause on federal student loan payments until 1 August 2022.
During the 2020 presidential election, Biden campaigned on promises to cancel all student loan debt for individuals who attended public colleges and universities from families with less than $125,000 in annual income and canceling $10,000 in student debt for everyone else.
Organizations including the NAACP, the AFL-CIO, more than 100 Democratic legislators and eight state attorneys general have called on Biden to take action on providing Americans with student debt relief before the 2022 midterm elections.
Nearly 45 million Americans have outstanding student loan debt, totaling more than $1.9tn. Black Americans are disproportionately affected, with Black graduates owing nearly twice as much in student loans after four years from graduating compared to white students.
More than half of federal student loan borrowers were not making payments toward their loans before the Covid-19 pandemic pauses due to deferment, forbearance, in default on the loans, or have zero payments based on income driven repayment plans. Many borrowers with student debt didn’t finish their degree.
The US government has reported billions in annual profits from student loan debt due to interest accrued on loans outpacing the principal of loans disbursed.
Due to high interest rates and compounding interest, many Americans find themselves paying thousands of dollars in interest alone, with their principal debt hardly being affected even while keeping up on monthly payments.
“People who aren’t in our particular version of hell seem to think it’s just like taking out a loan to buy a house or a car, where the balance almost always goes down over time,” said Jessica of New York, who requested to remain anonymous for fear of the stigma associated with debt.
She has paid more than $61,000 in student loan payments since 1997 on an original principal of $72,000, but now owes over $200,000 due to interest accruing since then, especially during periods when she couldn’t pay.
Khara Tina Hamilton, 61, of Oregon, a clinical mental health counselor, graduated with a nursing and psychology bachelor’s degree in the early 90s with less than $25,000 of student loan debt. After filing for bankruptcy in the early 2000s, Hamilton’s student debt wasn’t included in the bankruptcy and she later was convinced by Navient to consolidate her loans, which by then had ballooned from interest to over $63,000 despite making payments toward them for years.
“Since consolidating my loans in 2006, I have paid $67,229 and still owe $123,379 in principal, five times greater than what I originally borrowed,” said Hamilton.
During the pandemic, her loans, through the Federal Family Education Loan Program, were not eligible for the pause, so she and her husband have continued to make payments. She has another loan from graduate school, owing nearly $50,000.
“I have anxiety and sleepless nights over this debt. It scares me to think that I will carry this debt when I’m well into my 80s,” added Hamilton. “My student loan debt is larger than our only other debt, our mortgage. We have no other debt. No car payments, no credit card debts. We are frugal with our money and yet, I have a debt that I will never be able to pay off.”
A recent study published in the American Journal of Preventive Medicine found student debt in middle age increases the risk of cardiovascular illness.
For Martha Munro, 65, of Dover, New Jersey, her student debt has made it even more difficult as she currently suffers from ALS and uses a wheelchair, but continues working because she can’t afford to retire.
“I am now permanently in a wheelchair, can no longer drive, no longer speak so recognizable, can no longer cook, do my crafts, leave the house,” said Munro in an email.
She initially had $150,000 in student loans for her daughter’s college education, but over the years the debt has ballooned to $259,000 due to interest. She was working a second job before her diagnosis to cover the $1,200-a-month payments toward her student debt that she’s had to defer since she got sick and her husband has been unemployed due to a construction injury.
“My daughter was the 2009 valedictorian of her high school but this was during the recession. She received the Kiwanis scholarship, US Marine scholarship, Princeton Book scholarship and American Legion. All of them presented her with a piece of paper and their apologies that there would be no money this year due to the economy,” said Munro. “There needs to be total cancellation and the program has to be redone. How can people be paying for five years and owe more than they started out with?”