Vermonters with student loan debt relieved — and frustrated — by Biden’s loan forgiveness plan
Vermonters could receive up to $900 million in student loan debt forgiveness, under a plan announced Wednesday by President Joe Biden.
That’s an upper-end estimate by the Vermont Student Assistance Corporation, or VSAC, which administers some student loans and counsels Vermonters on higher education financing decisions. VSAC estimates 77,000 Vermonters have federal student loans, meaning thousands could be in line for debt relief.
The Biden administration plan comes with limits: Borrowers who make $125,000 or less will be eligible for up to $10,000 in federal relief. Those who received Pell Grants are eligible for up to $20,000.
For 28-year-old Julie Sophis of Essex Junction, who said she has $23,000 in student loans for undergraduate and graduate degrees, the plan will help her pay off her remaining debt.
"It definitely makes it feel like it's just tackleable — like we can just knock it right out,” she said.
Sophis said the debt forgiveness will allow her and her wife to focus on paying for her wife’s pursuit of an MBA, rather than worrying about Sophis’ debt.
Other borrowers who spoke to Vermont Public said the plan will allow them to prepare to have children and save for retirement.
But Biden’s plan also calls for the resumption of monthly payments for federal student loan borrowers beginning January 2023, which have been paused since the beginning of the pandemic.
For Steven Tanzi, who’s 26 and lives in Barre, the end of the pause means he’ll have to make a monthly student loan payment for the first time since graduating college, even as he’s in line to have nearly half of his $45,000 debt forgiven.
“I'm not going to complain about getting any assistance, but looking forward, I don't feel too much relief,” Tanzi said. “I'm still going to have to deal with this problem of getting my money to stretch everywhere.”
Lesley Hendry, a 38-year-old single mom who lives in Franklin County, said a $10,000 cut to her student loans won’t make much of a dent. She said she owes over $300,000 from an undergraduate degree and a law degree she received over a decade ago.
“For me, it means nothing,” Hendry said. “Making the assumption at this point that $10,000 comes off the back end, it'll bring my total down $10,000. That's not enough of a difference to impact my monthly payment.”
Hendry expects her monthly payment to be close to $500 when it resumes in January. However, she may not need to make that payment for too long: Hendry said she’s in the Public Service Loan Forgiveness Program, which could relieve her of all her student debt in about three years.
Vermont Public solicited Vermonters’ thoughts on the loan forgiveness plan on Reddit, which garnered a wide variety of responses, including the following:
Details of how the Biden administration will implement the loan forgiveness program have yet to be determined, and the plan could still face court challenges.
In the interim, Scott Giles, president of VSAC, said borrowers should be wary of companies that offer assistance navigating the new benefits for a fee.
“Whenever there is uncertainty for borrowers or complexities added, these groups pop up and start preying on borrowers who think they are going to need help obtaining a benefit,” he said.
VSAC by contrast, Giles said, offers student loan guidance to Vermonters for free, regardless of whether or not they have loans through the organization.