Just like South Bend mayor and 2020 presidential candidate, Pete Buttigieg, student loan debt is personal for me because I am one of the 43 million Americans with federal student loan debt. Together we make up $1.4 trillion of debt owed to the federal government, and that’s without factoring interest in which also must be paid. The system is truly broken and unfair to college graduates and is in desperate need of reform before our economy is crippled by this crisis. As a result, I’ve explained my situation to peers and have even testified in front of legislative committees, advocating for not only myself but people who have a much larger burden to bear, whenever possible.
My story starts in 2002 when I graduated from the University of Maine with a bachelor’s degree in civil engineering and over $22,000 in student debt. I hadn’t thought twice about taking out the federal Stafford loans because being from a middle-class family and going to a state university, financial aid was non-existent, work-study programs weren’t even an option and I needed a degree to pursue my career. I also remember hearing “a student loan is one of the best loans to have” or something like that because it was once an affordable way to establish credit. However, that’s before the cost of tuition grew and with it, interest rates on the very loans I had taken out for each semester with most around 7%.
I started paying on the loans that December after graduation when I was also fully employed as an entry level engineer in state government. In 2006 however, interest rates were forecast to rise even higher, so I decided to take advantage of a consolidation loan. Having no prior knowledge, all I knew was this would lower my payment and most importantly, lock me in to a fixed, lower interest rate of 5.5%. I didn’t even consider the actual repayment period would be extended and for how long I would be paying. It turns out that it was a 15 year repayment program — for a standard consolidation loan. That word “standard” is going to be important for later in this story.
In 2007 the Maine Legislature enacted the Educational Opportunity Tax Credit, referred to commonly as “Opportunity Maine,” which was the first sign that they realized what the burden of student debt was. However, the program was only for loans taken out after 2007, so my loan was not eligible. The Opportunity Maine program has been modified over the years and still exists today, but eligibility continues to remain only for loans from 2008 and beyond.
Also in 2007, Congress created the Public Service Loan Forgiveness (PSLF) program, as part of the College Cost Reduction and Access Act of 2007, which would grant total federal loan forgiveness for those working in the public sector after 120 qualifying payments, meaning that the first forgiveness payments wouldn’t occur until 2017. However, only those that had certain types of loans and repayment programs would qualify, and consolidation loans like mine weren’t eligible.
Flash forward to 2017 and the first reports of PSLF not being accessible as promised start to appear. As a result, Senate Democrats led by Senator Elizabeth Warren, as part of securing a compromise vote for the 2018 omnibus budget bill, also put in a provision for funding Temporary Expanded Public Service Loan Forgiveness (TEPSLF) in which more loans that were previously not eligible would now be able to be forgiven. Consolidation loans were part of that expansion, however funds were limited and on a first-come, first-serve basis, so I applied that summer as soon as I learned that FedLoan (the PSLF and TEPSLF servicer) was accepting applications.
Not surprisingly, my loan was denied for PSLF as one first had to be denied for PSLF to actually qualify for TEPSLF. So I followed the instructions on the Department of Education’s website and e-mailed FedLoan and asked them to reconsider my loan for TEPSLF eligibility. Months later, I received a statement saying that I was once again denied because my loan didn’t qualify. When I called my current servicer to confirm, they said it was because I had a “standard” consolidation loan instead of a direct consolidation loan. To be eligible for TEPSLF, I could refinance my loan with a different qualifying repayment program, but then I’d have to make an additional 120 payments to finally see forgiveness. Considering I now only had less than 36 to make, the math didn’t add up, although my level of frustration certainly had risen.
Needless to say, I am not alone in this frustration with the PSLF and TEPSLF programs. They are badly broken, and worse yet the Trump Administration is purposely letting them fail because they want to kill them. Public employees across the country who may have sought service as a means of forgiveness have now been part of the ultimate scam by the federal government.
My federal loan will (hopefully) be paid off by the time any action can take place but I still believe we must do better for those that continue to suffer the burden of student debt.
That’s where Pete Buttigieg and his “American Opportunity Agenda” comes in.
Fixing and expanding Public Service Loan Forgiveness
Pete has proposed a major fix to PSLF, starting with the repayment period. Instead of having to wait 10 years to achieve forgiveness, his plan starts payments of 5% forgiveness for each year of qualifying service and payments with a graduated system of increasing payments until there is total forgiveness on the remaining principal after the standard 10 years worth of payments.
He also plans to expand the types of loans that qualify and the positions that qualify such as rural physicians who are performing a service to the public even though they have a private employer.
In addition, he plans to make the national service programs he’s proposing in his “A New Call to Service” plan eligible for PSLF so that students going to college have that credit to the loans they may take out in addition to the compensation they would earn.
Public Service Loan Forgiveness itself should be a solution every American, regardless of college experience should be able to get behind because there is a return of service to the communities and states for the investment besides an economic return. This was the goal back in 2007 that has yet to be realized.
While it would be ideal to forgive all student debt in the country, and certainly a boost to the economy, that idea will never garner the overwhelming support from the majority of Americans who also didn’t attend college or have already paid their debt. PSLF however, and more importantly an expanded PSLF that actually works could.
Forgiveness for victims of for-profit schools
In addition to a functional and expanded PSLF, Pete has also proposed forgiveness for those who are victims of for-profit schools, many of which are now defunct. Many of these former students never were able to complete their degrees and as a result, now have credits that either don’t translate or are severely undervalued by other colleges and universities. However, they still have the loans to pay back with nothing to show for them.
This is an injustice which must be corrected and Pete will act to relieve the financial burden of those victims.
Automatic enrollment in income-based repayment programs
If not in public service, nor (luckily) a victim of for-profit colleges, for those struggling with payments with federal loans, Pete proposes automatic enrollment in affordable, income-based repayment programs with a 20-year repayment period and the principal remaining forgiven thereafter. Most importantly, the forgiveness would be non-taxable, unlike the current programs which offer forgiveness but require the recipient to claim it as taxable income with many taking a major hit to any refund or having to make additional payment to get out of debt.
20 years may sound like a long time and it is. I will have paid for 19 years on my student loans, for example when they are finally paid off in 2021. However, it also isn’t 30 or 40 years like some people are currently facing with repayment programs or deferrals. While the plan does still require people to pay back a portion of their loans, it gives people hope that their debt will eventually be gone without forcing them into dire straits. No longer will people need to significantly delay or abandon their life’s ambitions such as buying a home and/or starting a family and/or business because of student debt.
A “hopeful” solution for the future
Hope, a theme in Pete’s campaign, is something that this country desperately needs for the student loan debt crisis we face. With the rest of Pete’s plan including affordable college — there is also hope that the crisis will finally end instead of continuing for future generations.
I urge all readers of this story to read “The American Opportunity Agenda” because it has the most fair and comprehensive plan to address the student loan debt crisis that exists among 2020 candidates. Pete Buttigieg presents our best hope for a solution to this crisis, and we can turn that hope into reality by also making sure he is our next president in 2020.