When the government paused federal student loan payments at the start of the COVID-19 pandemic, it changed Cody Fulton’s life.

Because of monthly payments of $300 for his private loans and $600 for his federal loans, saving money had proved difficult. Being free of that $600 monthly payment empowered Fulton to make a big purchase.

“In a little under a year and a half’s time of just getting those federal student loan payments off of my plate and not paying them, I was able to purchase a home,” Fulton said. “And, man, that is insane.”

Now, the 34-year-old Brookline resident expects $20,000 of his roughly $100,000 student loan debt to be relieved, following an announcement by President Joe Biden of a student debt relief initiative. That will help, but what excites him most is a provision of the initiative that caps payment on undergraduate loans at 5% of discretionary income. It has inspired him to consider a potential career change several years down the line, from his current field of information technology to public history work — his deepest passion — perhaps at a museum.

“I’ve always been a huge fan of history and the importance [of what] history tells us for the future,” Fulton said. “And I feel it’s very important that the public knows that as well and shares in my love of history. It’s something I’ve always wanted to do.”

Others drowning in student loan debt won’t receive much assistance — and some won’t receive any. Biden’s student loan forgiveness program will provide substantial relief for millions but will do little to nothing for millions of others suffering the burden of their student loans. To some, the move just raises more questions about a higher education system that trades its benefits for enormous debt.

Refinanced debt devours a paycheck

Kaleigh Mauroni graduated college with a degree in linguistics, a subject she loved but one that didn’t yield a job in that field. She refinanced her student loan debt with NaviRefi, a refinancing program offered by the student loan servicer Navient, to help control monthly payments and interest rates. She now has about $65,000 in private loans, with monthly payments of about $900.

“It’s almost all of one of my paychecks per month,” said Mauroni, who gets paid biweekly.

The 26-year-old West Mifflin resident continues to pay off the loans, working as a paralegal. Looking back, she perceives the process of applying for loans and selecting payment plans as confusing and wonders if college was worth it.

“I am clearly not doing anything related to my degree, but if you don’t have a college degree — which my husband doesn’t — it’s really hard to get any kind of job that pays more than like $10 an hour, regardless of whether or not your theoretical degree will actually qualify you,” Mauroni said.

Biden’s plan doesn’t affect Mauroni’s private loans; it only forgives money from loans made by the federal government. Also, last week the administration updated the plan so that loans guaranteed by the federal government but held by private lenders would not qualify to be forgiven.

Cody Fulton stands outside of his new home in Brookline. They wear a blue and yellow plaid shirt and shorts, glasses and beard.
Cody Fulton stands outside of his new home in Brookline. He was able to buy it because of the federal government's decision to pause payments on some student debt. (Photo by Benjamin Brady/Rtvsrece)

Nonetheless, Biden’s initiative will cancel $10,000 of federal student loans or $20,000 for recipients of Pell Grants, for individuals who make less than $125,000. This will benefit as many as 43 million people and completely cancel the debt for about 20 million, according to the White House’s fact sheet touting the plan. An included series of tweaks to repayment policy will also be more forgiving to borrowers, and the pause on monthly payments of federal loans will end at the start of next year.

In Pennsylvania, about 1,717,300 borrowers are eligible for debt relief, about 988,800 of whom are Pell Grant recipients, according to a United States Department of Education press release.

More than 2 million Pennsylvania residents have student loan debt, according to a September report from the Keystone Research Center and PA Budget and Policy Center. Pennsylvania residents graduated with an average student loan debt of $39,375 in 2020. The state’s amount of student debt is fast growing, currently at $76 billion, four times the total in 2003 adjusted to inflation, according to the report.

All or nothing?

Najeeb Shafiq, an education economist and University of Pittsburgh professor, sees the Biden plan as a smart compromise in the sea of different perspectives offered by economists and politicians across the political spectrum, ranging from no forgiveness to total forgiveness.

“One is you do nothing, and the other is you do a lot, which is going to be very costly, so what’s the middle ground?” Shafiq said. “And I think the middle ground here was to design it in a way that was as equitable as possible and at the same time costly but not as costly as the extreme of forgiving everyone’s loans.”

The plan has been criticized by the right as unfair, wasteful and potentially illegal. There’s been some debate about how much it will end up costing the federal government in lost revenue. White House spokesperson Karine Jean-Pierre told CNN in late August that it will cost $240 billion, but a month later, a Congressional Budget Office report estimated the cost will be $400 billion. Last week Republican elected officials from six states sued to stop the plan, claiming it exceeds the president’s authority.

Meanwhile, the left views the move as insufficient, with progressive Democrats such as Massachusetts Sen. Elizabeth Warren pushing a plan for $50,000 in relief for any federal loan borrower regardless of income. Vermont Sen. Bernie Sanders has called for a total cancellation of private and federal student loan debt.

Shafiq acknowledges it will help people struggling and believes it has potential to create economic stimulus as newly unburdened people buy houses and make other large purchases. He also believes it’s legitimate to argue that it’s unfair to those who decided not to go to college.

There’s a long time period where I really didn’t think I would have kids because of this debt … It’s really timing.Taylor Stessney, Labor organizer

“I think there is considerable resentment from them as to, ‘OK, so if you’re giving this fairly large amount to college graduates, who we perceive as elites, are you giving us anything?’” Shafiq said.

Despite the criticisms and concerns, the plan polls well, with 51% in support compared to 39% opposed, according to a joint poll from The Economist and YouGov.

The human impact

Tracy Baton, a 59-year-old social worker and community organizer, has more than $100,000 in federal student loans after an undergraduate degree and multiple master’s degrees from post-graduate education.

Tracy Baton stands on the strip of grass between the two lanes of E Liberty Blvd on Friday, Sept. 30, 2022. (Photo by Lily Kubit/Rtvsrece)
Tracy Baton stands on the median between the two lanes of East Liberty Boulevard. Before the pause, she had about $500 of monthly payments for her student loans. (Photo by Lily Kubit/Rtvsrece)

Before the pause, she had about $500 of monthly payments for her loans. Because of the more generous repayment policies in the Biden plan, she expects that to drop by perhaps $100. And because she works for a nonprofit, she will have her debt completely forgiven after 10 years of payments.

That wouldn’t be a life-changing benefit for her but certainly a significant one — a common takeaway for recipients of relief from this plan.

“I notice every dollar. … A hundred dollars a month is a lot of money,” Baton said. “Anybody who thinks it isn't doesn’t understand money. That’s more than my car insurance.”

The pause on federal student loan payments helped Taylor Stessney to purchase a house in Swissvale, which she moved into about a year ago with her partner. She expects to have $20,000 of debt relieved by Biden’s plan, but that will still leave her with about $85,000, about half of which is in private loans.

Taylor Stessney stands in front of a mural at Roslyn Station off the Martin Luther King Jr. East Busway in Swissvale on Sept. 28, 2022.
Taylor Stessney stands in front of a mural at Roslyn Station off the Martin Luther King Jr. East Busway in Swissvale. “There’s a long time period where I really didn’t think I would have kids because of this debt.” (Photo by Lily Kubit/Rtvsrece)

Stessney, a 30-year-old labor organizer for the Restaurant Opportunities Center United, still has $500 monthly payments for her private loans and will have additional federal payments again once repayment resumes, which will make saving difficult again. This problem makes long-term decision-making difficult.

“There’s a long time period where I really didn’t think I would have kids because of this debt. … It’s really timing,” Stessney said. “The amount of debt I have, I can’t afford a kid right now, and I’m not sure what that will look like in five years.”

Matt Petras is an independent writer and educator based in the Pittsburgh area. He can be reached at matt456p@gmail.com or on Twitter @mattApetras.

This story was fact-checked by Aavin Mangalmurti.

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