North Carolinians carry $44B in student loan debt. Should Biden cancel some of it?
For Trey Roberts, who grew up in a high-poverty, rural part of Halifax County, college was the way to a better life.
“My only option out is to go to school,” Roberts said. “I didn’t think about cost.”
Roberts, who is Native American, attended community college for two years before attending William Peace University in Raleigh. Roberts graduated in 2018 with a degree in communications — and close to $40,000 in student loans.
Navigating the college aid process was novel for Roberts and members of his family. Tuition and fees at Peace, including room and board, cost more than $44,000 per year.
“Ignorance surrounded me all over. There was nobody to tell you that this is what it’s going to be like when you graduate,” said Roberts, 29, who works as a community engagement manager for Dix Parks Conservancy.
Before getting his current job, Roberts said he chose not to purchase health insurance, gambling that he’d stay healthy, in order to pay for rent and his car and keep up with student loan payments. Roberts owes about $29,000 in federal loans and $10,000 in private loans, figures that he said have barely budged since he’s been making payments.
Roberts, who pays about $333 a month combined on the loans, is not alone. North Carolinians held $44 billion in student loan debt in 2019, according to a report by the Center for Responsible Lending. More than half (57.5%) of those in the state who earned a bachelor’s degree at nonprofit public or private schools in 2017 graduated with federal student loan debt, averaging $26,526, according to the report.
All told, Americans face $1.7 trillion in student debt, according to the National Consumer Law Center.
But Roberts is hopeful that the Biden administration — pushed by progressive members of Congress, including U.S. Rep. Alma Adams of Charlotte — will wipe out all or part of his federal debt.
Biden has signaled he would be willing to sign legislation canceling up to $10,000 in federal student debt for some borrowers. But Adams and others in Congress, including U.S. Sen. Elizabeth Warren and Senate Majority Leader Chuck Schumer, have called on Biden to use executive action to wipe out $50,000 per borrower.
“The administration has the opportunity now to make good on the guarantee that education is the passport to the middle class,” said Adams, who taught at Bennett College for 40 years. “I know how young people struggle to pay this debt. President Biden now has the opportunity to build a stronger foundation of social and economic mobility for all.”
The $1.9 trillion COVID-19 relief package passed by the Senate on Saturday could make it easier for Biden to act. The bill includes a provision that makes any college loan forgiveness through Jan. 1, 2026, tax-free. Typically, federal law would treat forgiven debt as taxable income, leaving borrowers with a hefty tax bill for loan forgiveness.
Whose debt to cancel, and how much?
The Center For Responsible Lending, based in Durham, backs $50,000 in student loan debt cancellation and called for a blanket reduction for all borrowers regardless of school choice or income, specifically as a way to reduce the racial wealth gap. Black borrowers tend to carry larger debt burdens than white borrowers in similar situations.
“For us, the racial wealth gap is absolutely the most compelling piece about it,” said Rochelle Sparko, the center’s North Carolina policy director. “It would go a great distance to opening up our economy to a portion of our population that has been systematically kept out of it or pushed to the edges.”
Sparko said rural borrowers, regardless of race, struggle to pay off loans more than urban or suburban borrowers. Loan repayment, she said, is often a reason why students don’t return to their hometowns, instead seeking higher-paying opportunities elsewhere.
“The implications of canceling debt reach every corner of the state without question,” she said.
The idea is not without its critics — and there are questions about eligibility for high-income earners or those who attended elite private schools. Warren said canceling $50,000 would carry a price tag of about $650 billion, though that’s not new spending.
U.S. Sen. Richard Burr, a North Carolina Republican, has introduced legislation on student loan debt repayment several times in the last decade. His bill — the Repay Act — would simplify repayment, cap repayment at 10% of discretionary income and forgive loans after 20 years, he said. He called on the administration to work with him on the legislation.
“I’m not eager to see the Biden Administration pursue a dangerous and foolhardy proposal to simply forgive student debt,” Burr said earlier this year.
U.S. Rep. Madison Cawthorn, a Republican, said student debt cancellation is an attempt to “make us dependent on the federal government.”
“In the end it is the next generation, my generation, that will have to foot the bill for this debt and pay these taxes because people wanted to give away free tuition, because people wanted to try and buy votes,” the 25-year-old Cawthorn said at the Conservative Political Action Conference in February.
Cawthorn, who attended Patrick Henry College for one semester, said that people who didn’t go to college or people who had already paid off their loans “have to go and take care of the fiscal irresponsibility of another person.”
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This story was originally published March 9, 2021 at 2:45 PM.
