In 2001, Karen Herrera of Minnesota took the advice of a Sallie Mae representative to consolidate her student loan debt with her husband’s. They both worked in the public sector, but due to their type of loans, they were not eligible for the civil service discount. Herrera lost her job in 2009 due to the economic recession, and although the couple filed for bankruptcy, their student loan debts remained.
Herrera and her husband have continued to make monthly payments throughout the pandemic because their loans under the federal Family Education Loan Program were not eligible for the payment pause.
Despite repaying the amount they withdrew, Herrera and her husband currently owe more than $74,000. “Our initial capital was $46,575. To date we have paid $73,283. Sixty thousand three hundred and eighty-six dollars went to interest and $12,897 to principal over 21 years,” Herrera said.
She is currently hoping for legislation from Congress that would allow her and other couples to split their loans so they would be eligible for public service waivers.
Herrera is also among millions of Americans waiting for some form of student debt relief as the Biden administration currently mulls a decision on student debt relief after extending the Covid-19 pandemic pause on federal student loan payments through August 1, 2022.
During the 2020 presidential election, Biden campaigned on a promise to cancel all student loan debt for people attending public colleges and universities from families with less than $125,000 in annual income and to cancel 10 $000 in student debt for everyone else.
Organizations including the NAACP, AFL-CIO, more than 100 Democratic lawmakers and eight state attorneys general have called on Biden to take action to provide Americans with student debt relief ahead of the 2022 midterm elections. .
Nearly 45 million Americans have outstanding student loan debt, totaling more than $1.9 billion. Black Americans are disproportionately affected, with black graduates owing nearly twice as many student loans four years after graduation as white students.
More than half of federal student loan borrowers were not making loan payments before the Covid-19 pandemic pause due to loan deferral, forbearance, loan default or had no payments based on income-driven repayment plans. Many borrowers in debt have not completed their studies.
The US government has reported billions in annual profits from student loan debt due to accrued interest on loans exceeding the principal of loans disbursed.
Due to high interest rates and compound interest, many Americans find themselves paying thousands of dollars in interest alone, with their principal debt hardly affected even if they maintain their monthly payments.
“People who aren’t in our particular version of hell seem to think it’s like taking out a loan to buy a house or a car, where the balance almost always goes down over time,” said Jessica from New York. , who asked to remain anonymous for fear of the stigma associated with debt.
She’s paid more than $61,000 in student loan repayments since 1997 out of an original principal of $72,000, but now owes more than $200,000 due to interest accrued since then, especially during times when she couldn’t. pay.
Khara Tina Hamilton, 61, of Oregon, a clinical mental health counselor, earned a bachelor’s degree in nursing and psychology in the early 1990s with less than $25,000 in student debt. After filing for bankruptcy in the early 2000s, Hamilton’s student debt was not included in the bankruptcy and she was later convinced by Navient to consolidate her loans, which by then had grown from interest to over 63,000 $ despite payments made for years.
“Since consolidating my loans in 2006, I’ve paid $67,229 and still owe $123,379 in principal, five times more than I originally borrowed,” Hamilton said.
During the pandemic, her loans, through the federal Family Education Loans Program, were not eligible for the pause, so she and her husband continued to make payments. She has another loan from graduate school, which owes nearly $50,000.
“I have anxiety and sleepless nights because of this debt. It scares me to think I’ll carry this debt when I’m over 80,” Hamilton added. “My student loan debt is bigger than our only other debt, our mortgage. We have no other debt. No car payments, no credit card debt. We’re frugal with our money and yet I have debt. which I will never be able to repay.
A recent study published in the American Journal of Preventive Medicine found that middle-aged student debt increases the risk of cardiovascular disease.
For Martha Munro, 65, of Dover, New Jersey, her student debt has made it even more difficult as she currently has ALS and uses a wheelchair, but continues to work because she cannot afford it. to retire.
“I’m now permanently in a wheelchair, can’t drive, can’t speak so recognizably, can’t cook, do my crafts, get out of the house,” Munro said in an email.
She originally had $150,000 in student loans for her daughter’s college education, but over the years the debt soared to $259,000 due to interest. She was working a second job before her diagnosis to cover payments of $1,200 a month for her student debt that she has had to defer since she fell ill and her husband is unemployed due to a car accident. construction.
“My daughter was the 2009 valedictorian of her high school, but that was during the recession. She received the Kiwanis scholarship, the US Marine scholarship, the Princeton Book scholarship, and the American Legion. All presented her with a piece of paper and their apologies that there would be no money this year because of the economy,” Munro said. “It needs a total cancellation and the program needs to be redone. How can people pay for five years? and owe more than they were at the start?