BBC Capstone Project Fall 2022

Debt forgiveness provides hope, concerns for students, faculty, and staff
By Bailey Britton

The Biden student loan debt forgiveness plan is currently on pause as a federal appeals court issued an injunction on the policy. Kansas is one of several states suing the federal government over the proposed plan. Kansas State University students and professors still await debt forgiveness, but many have differing opinions.

The plan, if instated, could impact many K-State students.

“It should impact quite a few of our students,” Jodi Kaus, director of Powercat Financial, said. “It won’t impact our new freshmen — it’s not for any student loans that were borrowed this year — but any student loans from last year or before, the student will have to meet the income requirements so not all students will be eligible for the relief, but quite a few will meet those requirements.”

If borrowers meet the income requirements, they could receive up to $20,000 in debt forgiveness.

“Lots of things can change between when the first idea is announced and when the actual, final relief is provided,” Kaus said.

Economics professor Daniel Kuester says that debt relief has pros and cons, just as anything involving the economy.

“​​You can frame it as a good thing or a bad thing in terms of economy,” Kuester said. “I mean, generally, we like people working and all that, obviously, but the timing of it is unfortunate, in terms of how it will be inflationary.”

Right now, the inflation rate in the United States is 7.75%. Kuester said inflation is caused by a number of things, such as supply chain demands and other government stimulus plans, but he is unsure how the debt relief would directly affect the current inflation rate.

“I mean, obviously, people talk about this more on a micro level,” Kuester said. “Some economic activity, it's gonna create probably a few more jobs. That money flows into the economy, but it also would certainly be expected to be inflationary.”

However, Kuester said it’s hard to say exactly what would happen.

“There's a lot of moving parts,” Kuester said.

Kuester said the debt relief plan is a topic of interest at K-State and in higher education in general because of the nature of the plan. However, it is something that comes up in his economics classes.

“It's something we'll talk about more in senior seminar than I will in principles of economics,” Kuester said. “I let them choose a topic and then we spent the last day on that topic. I could just present a card of matter of fact, ‘Here's the cost, here's the potential impact on the economy from both inflation and unemployment perspective,’ things like that.”

Even without the finalized debt relief plan, students are hopeful. Bailey Roberts, senior in animal sciences and industry, said she applied for debt relief even though she doesn’t think she fully qualified.

“I have probably about $3,500 in debt right now,” Roberts said. “I am actually trying to apply for more student loans right now and for the next semester.”

According to The Education Data initiative, the average amount of student loan debt after earning a four-year degree is $34,100. That only considers government student loans, however. Some students take out private loans, which aren’t affected by the proposed debt relief plan.

“We have already one generation that is crippled by debt and then we have the second generation,” Roberts said. “So it was millennials and now Gen Z that is coming up that is going to be crippled as well. The older Gen Z are already starting to feel the effects of it.”

Students can learn more about student loan repayment through the Powercat Financial website. All borrowers can access their loan repayment information through the FAFSA website at StudentAid.gov.

https://www.cnn.com/2022/11/22/politics/student-loan-repayment-freeze-extended

Biden extends student loan repayment freeze as forgiveness program is tied up in courts | CNN Politics The Biden administration is yet again extending the pause on federal student loan payments, a benefit that began in March 2020 to help people who were struggling financially due to the Covid-19 pandemic.

The Student Debt Relief application is live — why was it necessary in the first place?
By Bailey Britton

Student loans seem pervasive in modern day culture, but they haven’t always existed. The origins of student loans are complicated, which led to complicated policies that affect borrowers today.

Recently, President Joe Biden announced that the federal government will forgive student loans for some borrowers. Borrowers who did not receive a Pell Grant and make less than $125,000 — $250,000 for households — are eligible for up to $10,000 in relief. Borrowers who received a Pell Grant in the same salary range are eligible for up to $20,000 in relief.

But how did student loan debt become so pervasive that Biden proposed this plan?

The Student Debt Relief application is live — why was it necessary in the first place?
By Bailey Britton

Student loans seem pervasive in modern day culture, but they haven’t always existed. The origins of student loans are complicated, which led to complicated policies that affect borrowers today.

Recently, President Joe Biden announced that the federal government will forgive student loans for some borrowers. Borrowers who did not receive a Pell Grant and make less than $125,000 — $250,000 for households — are eligible for up to $10,000 in relief. Borrowers who received a Pell Grant in the same salary range are eligible for up to $20,000 in relief.

But how did student loan debt become so pervasive that Biden proposed this plan?

It all started when Sputnik was launched into the atmosphere.

At that time, Americans felt they had fallen behind in education compared to the Soviet Union. The Senate struggled to pass education bills, but decided that if the education bill was included in a defense bill, it might pass the Senate. Congress passed the National Defense Education Act 11 months later.

The National Defense Education Act focused mainly on STEM education. President Lyndon Johnson wanted to expand the opportunity for education to more people, as he himself grew up poor and benefitted from loans to attend college. Johnson pushed for the Higher Education Act, which was last extended in 2008.

At the time, the federal government didn’t loan directly to students. Instead, the government outsourced to banks but covered the losses if students did not pay back their loans.

College attendance skyrocketed in the 1960s and 70s, but so did inflation. In 1972, the U.S. Government created Sallie Mae, an entity that acted as the middleman between banks and the government. This continued until after the Great Recession in 2008.

In 2010, the government began loaning directly to students, cutting out the middleman, which is today's current practice.

On October 14, the Biden Administration officially opened the beta version of the Student Debt Relief application. The application will remain open until the end of 2023. The White House estimates that 40 million borrowers are eligible for debt relief.
It all started when Sputnik was launched into the atmosphere.