Colorado student loan debtors to the government: lift off this weight and prioritize higher education for all, the way other wealthy democracies do.
They’re demanding permanent cancellation of federal student loan debt and a seventh extension of the COVID-19 pandemic pause on repayment — and intervention Biden administration officials say they’ll decide on before Aug. 31.
“For me, this would mean a fighting chance to move toward financial independence and security,” said Michaela Cardinal, 24, who graduated from the University of Colorado in Denver last year and works full time earning $42,000. She owes roughly $30,000 to the government and private lenders. She was the first in her family of ten children to attend college and has relied on her political science degree to begin a career aimed at social good.
But conservatives see erasing debts and a longer pause as abhorrent, an insult to working taxpayers who never attended college, and compare it to forgiving automobile, small business and house loans.
“I just don’t get this sense of entitlement, that somebody owes them something,” said political consultant Dick Wadhams, a former chief of the state Republican Party. “There should be very generous consideration of the time to pay off these loans. That’s fine. But walking away from it? Letting somebody else pay? That is wrong. And it undermines our society when that attitude is rewarded.”
The standoff here reflects Colorado’s position in the eye of a storm intensifying as President Joe Biden’s administration mulls an unprecedented mass debt cancellation ahead of the midterm elections.
Student loan debt in Colorado has been decreasing since 2015, a Denver Post review of state and federal data shows — contrary to crisis narratives implying debt loads are spiraling out of control. The 62% share of students graduating in 2015 with four-year degrees owing loan debts (average amount $28,700) decreased to 55% in 2020 (average debt $25,700), Colorado Department of Higher Education data shows. For those with two-year degrees, the 53% of graduates with debt (average $15,100) decreased to 42% (average $13,300).
The stats pertain to students at public universities in Colorado. If graduates in Colorado who attended college in other states are included, state officials said, about 771,000 debtors overall owe a total of $28 billion with an average of about $36,300. That amount compares with a $31,000 average automobile loan debt for new cars.
But student loan debt relief has emerged as a rallying cry for a new generation of college graduates and their families who grew up hearing higher education is essential for jobs and the future of the nation in a knowledge-driven global economy.
Nationwide, an estimated 43 million Americans owe a total student loan debt of around $1.73 trillion, up from $1.35 trillion in 2015, federal tables show. The government — which since 1958 has offered federal student loans and since 1965 backed up loans given by banks — owns the bulk ($1.62 trillion) of the debt.
Biden officials have said the debt forgiveness they are considering could include cancellation of $10,000 for borrowers with household incomes under $125,000. Biden may also declare another extension of the pause on repayment, which is scheduled to expire Aug. 31. Federal education officials instructed student loan servicers not to send out required advance notices to borrowers about payments re-starting.
Colorado Gov. Jared Polis and Attorney General Phil Weiser have pressed at the forefront of a campaign for debt cancellation and further extension of the repayment pause that began in March 2020.
Polis in March urged Biden to further extend “the past two years of suspended payments,” pointed to typical student loan monthly payments topping $300, and invoked inflation: “Families with student debt still struggle to stay afloat as every other aspect of American life becomes more expensive.”
A year earlier, Weiser had sent a letter to Education Secretary Miguel Cardona commending Biden’s commitment to using executive authority to cancel student debt. Colorado officials advocated creation of “an automatic method to target those most in need of relief” and debt cancellation encompassing all federal loans.
Weiser simultaneously has been tackling for-profit colleges, investigating “people who deceived students into payment plans they knew students wouldn’t be able to make.” State attorneys over the past four years helped 8,500 borrowers in Colorado receive $44.6 million in refunds or debt cancellations.
And Weiser has asked U.S. Attorney Cole Finegan to provide grace to student loan borrowers in bankruptcy.
Federal cancellation of loan debts would break new ground.
A $10,000 bump “would be absolutely amazing and would fast forward my life goals. I’d be able to have a career, home and family faster than I ever thought I’d be able to,” said Kaydee Lucero, 20, a student at Colorado Mesa University in Grand Junction. She shares an apartment with her sister and works up to 50 hours a week, earning about $2,000 a month, running a coffee shop and editing the university newspaper — on top of studying with an eye to eventually attending law school.
The $400 a month payments she anticipates could prevent further education. Lucero said she worries about sudden new expenses. The green 2002 Honda Accord sedan she relies on to reach classes and work, with more than 200,000 miles on the odometer, for example, breaks down.
“I’m going to have to work a lot and save a lot and hopefully not gain any more debt. It was definitely a hard choice for me to go into debt. The entire idea of debt is scary. I know I’ll have to take out more loans for schools. It’s stressful to think about that. It becomes overwhelming,” she said.
“This matters because my generation eventually will be running this country. And we’re getting set up for failure.”
Lucero looks to Europe. “All the other countries that are at the top of the food chain help their students pay for college or give them free college because they recognize that education is important,” Lucero said. “It doesn’t help anybody to put us in massive debt to get the education we need to survive in the workforce. Most jobs now require more education than they did before.”
For Cardinal, debt cancellation to defray “the weight hanging over my head” would reward steady efforts overcoming obstacles.
As a public high school student in Jefferson County, she heard teachers and counselors advising her again and again that college education is crucial. She saw that elite private colleges cost up to $75,000 a year. She started at the University of Colorado in Boulder and then shifted halfway through to CU-Denver because it cost less.
“I believe I did everything right. I obtained scholarships. I obtained grants. I went to state schools, even transferred to a less expensive state school – and still graduated in debt,” said Cardinal, who picked political science in a desire to prepare herself for more than “a cut and dry career” and found it gave her an understanding “of the things that tie us together.”
College education gives “a beautiful opportunity to explore yourself and the world. It is not necessarily a choice. You take on the debt because you want to go to college and you need to go to college to achieve goals. You sign off on this debt when you’re 18. It feels coercive. It certainly is not the same as taking on debt to purchase a new truck.”
She’s been bracing with less than three weeks before repayments may resume, calculating she’ll have to come up with $326 each month.
She’d already moved from a $1,500-a-month one-bedroom apartment she rented in north Denver to a house shared with friends where she pays $500.
The silver 2008 Hyundai Tucson with 85,000 miles on it and a crooked front bumper, which she bought at a salvage lot, has been holding out. Her father died recently and, to help pay loan debts, Cardinal said she’s contemplating using her $10,000 inheritance.
“It’s kind of just me building this life,” she said, and debt cancellation “would mean more room to do that – beyond just living paycheck to paycheck.”
She wanted to learn to think critically and has worked at a health clinic. Now while working as a project coordinator for the non-profit Colorado Association for School-based Health Care she’s considering possible careers as a nurse, mental health counselor or social worker. “But I certainly cannot afford graduate school.”
The advocates of student debt relief have been ramping up pressure at the White House, invoking inflation.
“Turning on payments now is one of the worst things President Biden could do to the economy,” National Student Debt Crisis Center director Cody Hounanian said. “It would take money out of the hands of regular people and hand it to the government just when we most need spending power.”
But Biden “could jumpstart the economy and put millions of people on the path to economic freedom,” he said, “by continuing the payment pause and canceling student loans.”
Lenders cry foul, though some urge a broader solution, perhaps beginning with consideration of how other nations handle financing of higher education.
“Just canceling debt doesn’t fix the problem. The problem is that we incur way too much education debt,” said Mary Jo, managing partner for Phoenix-based Yrefly, which re-finances loans for struggling borrowers.
She lamented that further extension of the repayments pause — “a big political volleyball” – would hurt lenders. “What can we do to get students out of this situation?”
In Colorado, Wadhams publicly has made the case against student loan debt forgiveness. Growing up in one of the state’s lowest-income rural areas, he said he never questioned norms of fiscal and personal responsibility.
As a teenager, he worked hoisting hay and helping raise pigs around Las Animas in the Arkansas River Valley. He was able to attend Colorado State University in Pueblo without taking loans.
Biden is motivated politically to draw votes for Democrats in the midterm election, Wadhams said. But debt cancellation will backfire by alienating millions “who work hard their entire lives, and didn’t get to attend college” and whose taxes would contribute to bailouts – a non-elite wing of the Democratic Party, he said.
“When you take out a student loan, you have to pay it back – just like loans for a car, or for a house,” Wadhams said.
“Where would this stop? Why would anybody pay off any kind of loan from the government? An SBA (Small Business Administration) loan? This would definitely incentivize irresponsible fiscal behavior in the future.”
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