Student loan debt has been a hot topic, especially since the start of the pandemic in 2020. When the Biden Administration halted payments and accruing interest, it gave a much-needed break to millions of borrowers who still owe on their loans. With a total debt of $1.64 trillion, many people in every state will begin repaying their loans as of October 2023.
With an average of $37000 worth of debt per borrower, the student loan debt crisis is still looming. The issue looms even after the Biden Administration was able to cancel the deficit of $39 billion, effectively forgiving student loan debt for more than 800,000 former students.
“For far too long, borrowers fell through the cracks of a broken system,” Education Secretary Miguel Cardona said after the announcement from the White House.
However, looking at student debt isn't a cut-and-dried system. Demographics like age, race, and even state residence must be analyzed before you better understand what that long-term debt does to the average borrower.
Debt By The Numbers
Regarding state debt per borrower, you get a regional analysis. The top five states for debt per borrower are all on the East Coast and include Washington, D.C., in first place with the most debt per holder. Maryland, Georgia, Virginia, and Florida round out the top five states with the most debt per account.
On the flip side of that coin, the lowest five states, except for Wyoming, are all in the Central U.S. They are in order of debt per student: Wyoming, Oklahoma, South Dakota, Iowa, and North Dakota. When comparing the top five states to the lowest five, there is, on average, a two-times difference in each student's debt.
WalletHub ran critical metrics for each state to better understand the overall student debt crisis. They included areas like the share of graduates with debt, average debt percentage of income, the number of students with past-due or loans in default, and borrowers enrolled in an income-driven repayment plan.
The finance site also ran metrics for the Loan Forgiveness or SAVE plan. These benchmarks included areas of study such as the average debt eligible for forgiveness per borrower, the number of loan holders eligible for forgiveness, the share of debt eligible for the plan, and the taxation of student loan forgiveness.
Payment Moratorium Ends
With the Supreme Court of the United States nixing the Biden Administration's efforts to forgive up to $20,000 in debt for all borrowers across the board in their July 6, 2023 decision, nearly 40 million people saw the immense help student loan forgiveness would have provided go up in smoke.
As of September 1, 2023, student loans began accruing interest, with new payment schedules starting again as of October 1, 2023. For those 40 million, the pinch will be swift after nearly three years of a non-payment structure.
While the Biden Administration was understandably disappointed by the Supreme Court decision, they haven't let that stop them from trying to find a way around or over the official ruling. As recently as September 20, 2023, Democrats were looking at ways to help President Biden fulfill his campaign promise.
Alexandria Ocasio-Cortez, a Democrat Representative from New York, said, “There is absolutely still a chance of cancellation. When the Supreme Court struck it down, they said that the administration couldn't use a specific avenue, namely the HEROES Act, but there are alternative avenues that we have pursued. They will be laying out that program over the course of the next year.”
Patience Is Key
Jack Wallace, Director of Government and Lender Relations at Yrefy states that patience, preparedness, and proactiveness are essential. He also encourages people to sign up for the SAVE (Saving on a Valuable Education) plan and to exhaust all their options for income-driven repayment (IDR) plans.
As Democrats and Republicans face a new possible shutdown, it can seem like an eternity waiting for movement on student debt. However, practicing those three P's will pay off, and patience will persevere.