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The personal impact of student loan forgiveness

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H. Michael Miley
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Flickr

Starting businesses, buying homes, having families – WMRA's Randi B. Hagi spoke with three Millennials about what federal debt forgiveness will mean for their lives.

Heidi Jablonski is a 30-year-old theater artist and parent who lives in Harrisonburg. She graduated from Eastern Mennonite University with a liberal arts degree. Her husband, Caleb, is a middle school math teacher.

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Heidi Jablonski
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Heidi Jablonski is a theater artist and parent.

HEIDI JABLONSKI: If everything goes well, I should be approved for all of the federal loans to be forgiven, which is kind of hard to fathom at this point. … I mean, we really had no expectation that we would pay off our student loans before we were in our forties.

Altogether, the couple had about $80,000 in student debt – Caleb's in private loans, and Heidi's a mix of private and federal. The monthly payments have been a major financial stressor as they raise their two young kids. The repayment pause for federal student loans during the pandemic was a big help.

JABLONSKI: We were able to have a little bit of wiggle room in our budget in a way we weren't really used to. … one example that sticks out to me is, we decided to buy a little whale-shaped bath toy organizer instead of just keeping the baby bath toys in a pile on the floor. It was $15, but that was the sort of thing that, it wasn't a necessity, and we didn't need it, but it was a nice thing to have.

Because she received Pell Grants, Jablonski should qualify for the full $20,000 of forgiveness. The impact that would have on their budget? More confidence in making mortgage payments, and possibly buying a new-to-them used car.

Curtis Handy is a 28-year-old from Waynesboro who also got his bachelor's degree from Eastern Mennonite University. He's currently earning a master's degree in occupational therapy from Radford University Carilion, and has a part-time job working with older teens in the foster care system. His wife, Jemma, works in human resources.

Handy hopes the graduate degree will increase his earning potential.

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Curtis Handy
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Curtis Handy is a graduate student at Radford University Carilion.

CURTIS HANDY: You know, a big reason I came back to graduate school is because of the amount of debt that I had. It was just hard to manage the debt.

While only a quarter of borrowers owe the government more than $40,000 on student loans, Handy is in this category. He took out a mix of federal and private loans to get through his undergrad degree, which totalled close to $100,000. For graduate school, he'll be adding around another 70 in federal loans. He's expecting 20 to be forgiven.

HANDY: So it'll definitely take a small chunk out of it, at least. I mean, again, I wasn't expecting anything. So I'm happy to be taking something out. … I mean, really, I think it's going to help me be able to afford a house with Jemma one day.

They're planning to live with family after he graduates to save money and pay off debt. He's hopeful that, after he's worked in the occupational therapy field for five to 10 years, he might be in a position to open his own practice.

Alexandra Schmidt is a 27-year old soil scientist based in Harrisonburg with the Natural Resources Conservation Service. She earned a bachelor's degree in environmental science from Delaware Valley University in Pennsylvania.

ALEXANDRA SCHMIDT: I did not go to my dream school, which – I'm from the Philadelphia area – was Drexel.

She was accepted into Drexel's honors program, and offered a $20,000 scholarship – but it still would have cost her tens of thousands per year to attend. With going to Delaware Valley, she ended up taking out about $28,000, all in federal loans. Schmidt then earned a master's degree in crop and soil environmental sciences from Virginia Tech, which she paid for by working as a research and teaching assistant. Her family encouraged and supported her, but wasn't in a position to help pay for school.

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Alexandra Schmidt
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Alexandra Schmidt is a soil scientist with the Natural Resources Conservation Service.

SCHMIDT: You know, being a single mother was not easy. I lost my father – they were separated, but I lost my father during my sophomore year of college, and my mother's ability to really just encourage us to follow our dreams – you know, she has a GED. She did not go to college. My sister and I are kind of the first people to get degrees in the family.

Many government employees benefit from the Public Service Loan Forgiveness program, which erases your remaining student loans after you make 120 monthly payments. But because Schmidt borrowed less than $30,000, she had to pay hers off in that exact amount of time. So, she made the payments, continuing even after the repayment pause went into effect. She now owes $20,500 – which means that she's about to be student-debt-free.

SCHMIDT: I can start seriously looking into purchasing a home … starting a family, all of that wonderful stuff that, up until now, didn't really seem like it was on the table.

She's also excited to invest in the new LLC she founded last month. She's envisioning a pick-your-own fruit and vegetable operation with educational programming.

SCHMIDT: This generation is just as capable as past generations to be creative and innovative. They can start their own businesses, organizations that serve the community in their own way, according to whatever their skill set is. So what makes me more excited than starting my own business is knowing that others will be able to feel the relief as well, and be able to pursue their own dreams, without the fear of being in a position where they cannot pay their loans back.

According to the Federal Student Aid website, the loan forgiveness application will be available by early October, although millions of borrowers may be granted relief automatically, if The Department of Education already has data on their income.

Randi B. Hagi first joined the WMRA team in 2019 as a freelance reporter. Her writing and photography have been featured in The Harrisonburg Citizen, where she previously served as the assistant editor; as well as The Mennonite; Mennonite World Review; and Eastern Mennonite University's Crossroads magazine.