President Biden’s announcement that the government will forgive as much as $20,000 in federal student debt particularly good news in Pennsylvania, which ranks behind only Connecticut and New Hampshire among states with the highest average student debt.
Biden said $10,000 of federal debt would be forgiven for people making less than $125,000 a year. Borrowers who received Pell Grants, which help low- and moderate-income families, are eligible for up to $10,000 in forgiveness. In addition, the pandemic pause in federal student loan repayment will be extended for the last time until December 31st. Interest rates remain at 0% during the pause and debt collection is suspended.
“Education is a ticket to a better life,” Biden said, “but over time, that ticket has become too expensive for many Americans.” Now an entire generation is burdened with overwhelming debt in exchange for trying to at least get a college education. The burden is so heavy that even if you graduate, you may not have access to the middle-class life that a college degree once provided.”
According to the Department of Education, more than 36 million Americans have student loans from the federal government, totaling more than 1.3 trillion.
According to Lendedu, the average monthly student loan payment in Pennsylvania is just over $216. The data shows that in the class of 2019-2020, the average Penn State graduate has $39,375 in loans, about 8.5% more than the 2018 graduate. Overall, 64% of graduates in Pennsylvania have student loan debt.
Among the 25 colleges in Pennsylvania that grant the most bachelor’s degrees in 2019-20, Drexel University had the highest average debt among graduates, about $73,000. Among the local schools on the list, Kutztown University averaged about $41,000 and Lehigh University averaged about $35,000.
Biden’s forgiveness plan does not cover non-federal debt, which is often more expensive and offers fewer consumer protections than federal debt. In Pennsylvania, 22 percent of college graduates had private student debt, with the average private debt among those borrowers being $42,361.
Fifty-three percent of Penn State graduates attended public colleges, while the remaining 47% attended private, for-profit colleges, where costs and debt are typically higher than public colleges.
Since 1980, the cost of four-year colleges, public and private, has almost three times but federal support lags behind. Pell Grants once covered almost 80 percent of the cost of a four-year public college for students from working families, but now cover only a third.
Sen. Robert Casey, D-Pennsylvania, said Biden’s move “lightened the burden for millions of Americans struggling under the burden of student debt.”
“It will give them the freedom to invest in their future, buy a house or take a risk and start a business,” he said. “This is an important first step forward in helping borrowers burdened by student debt. Moving forward, we must work to reduce the steep costs of college education so future students can get an education without signing up for a lifetime of debt.”