I’m Jillian Berman, a reporter at MarketWatch, where I’ve covered student debt since 2015. In that time, I’ve written about farmers seeking student loan forgiveness, the ‘morally suspect’ way the government collects student loans, colleges’ pandem...

Do you think there is enough political will to have massive student loan forgiveness under the Biden administration?

If so, would there be any compensation for people who already paid their loans in full or for others who would like to pursue advanced education, but delayed because they didn't have the money or want the debt?

Is there a potential moral hazard in forgiving loans en masse?

I can’t speculate about what the Biden administration will or won’t do, but the idea probably has the most mainstream support it’s ever had -- Senate Majority Leader Chuck Schumer is pushing for $50,000 in student debt cancellation -- since it was first brought up at Occupy Wall Street in 2011. On the campaign trail, President Biden expressed support for canceling $10,000 in student debt and his administration has said they haven’t ruled out doing it. Still, he’s expressed some skepticism in interviews with the New York Times and a CNN town hall. As for whether there would be any compensation for those who already paid off their loans -- that’s unclear. Supporters of student loan cancellation will point out that people who have already paid off their debt are more likely to have attended college when it was heavily subsidized by the government and so much cheaper. This piece I wrote shortly after Biden was elected breaks down some of the pro and con arguments for the policy.

You've clearly seen a lot - what is the number one thing that a lay person should know about student debt that they don't?

Wow, this is a tough question! I think one thing to keep in mind when using student loans is that they’re a financial product, just like any type of loan. A lot of times, since student loans are associated with education and borrowers are usually getting information on them from a trusted source (like an educator or college) borrowers assume there are fewer opportunities to get tripped up than with your typical loan.

While federal student loans offer a lot of protections not available in commercial consumer loan products, borrowers still need to advocate for themselves, similar to what they might do with any loan product (ie, research your options, save paperwork, take notes on conversations with customer service etc.), when they’re trying to access a benefit of the loans, like Public Service Loan Forgiveness or income-driven repayment.

Is University a bubble? Are degrees worth the cost?

A lot to unpack here! Whether your degree is worth the cost can depend on so many questions, for example how much you expect to earn after you graduate and how the experience might benefit you in less tangible ways.

On average, people who graduate from college earn more over their lifetimes than people who don’t, but of course that’s an average and there are a lot of exceptions and caveats. There are some inexpensive schools that do a really great job of improving students’ economic lives and there are some that have been accused of luring students into debt for degrees that don’t pay off.

College financial planning experts will often recommend students think about what they want to do after they graduate and how much that might pay to get a sense of the ROI of their degree before they attend.

Should student loans be limited to lower amounts than they are at present? If the problem is repaying the debt, perhaps a solution would be reducing the principal balance?

Hi!

Excited to get started! Right now the federal government does cap the amount undergraduates can borrow. The limits depend on a few things, including your year in school and whether you are a dependent student -- essentially lived in your parents’ household right before entering college, -- or an independent student. Even if students borrow up to the limit -- at $31,000 for dependent students and $57,500 for independent students -- they still may not be able to pay for a four-year degree (for example, the College Board found that the average annual tuition price at a four-year public college was $10,560 for the 2019-2020 academic year, or ~$42,000 for a four year degree).

Some have wondered whether the PLUS program, which allows parents and graduate students to borrow up to a program’s cost of attendance, has fueled a major uptick in student debt. The Trump administration proposed limits on these loans, but some consumer advocates have worried that capping them would force students to take on private loans, which can have fewer protections than federal.

One big point of concern for advocates and borrowers has actually been the interest on the debt, -- which in some cases can be higher than mortgages or other types of consumer loans and can’t be refinanced through the government, -- and how quickly it can accrue for borrowers struggling to afford minimum payments.

what is the difference between the US and other developed countries when it comes to student debt or a lack thereof?

This obviously depends on the country, but I’ll highlight a few differences. In many European countries (perhaps most famously Germany), the government subsidizes college at levels that are much higher than in the U.S., allowing students to go for free or at a very low cost. In these countries, the college experience maybe a bit more bare bones than what we’re used to here.

Other countries use a student loan system like the U.S., but it can have different features. For example, in Australia, borrowers pay back their loans as a percentage of their income that’s automatically deducted from their wages, like a payroll tax here.

Do you know if the Biden administration plans to increase federal aid to make higher education more affordable to help eliminate the need for some families to get student loans? If so, what would tuition look like for an average student going to, let's say, a state university?

The Biden administration (and candidate Joe Biden on the campaign trail) have floated a number of proposals to address college affordability. Two that are getting the most attention are probably: -- Increasing the maximum Pell grant, the money the federal government provides low-income students to pay for college -- Making community college free.

It’s hard to say exactly how these would impact the average student, but certainly Pell grant recipients would receive some relief (though not as much as advocates are pushing for) from college costs. In addition, the community college proposal would make community college more affordable for all students and potentially allow students to spend Pell grants that currently only cover tuition on living expenses, which can be a real burden for many students.

Hi Jillian. Can you discuss commercially held FFELP loans and what if any possibilities there may be for forgiveness? I've read that these loans could possibly be converted to direct consolidation loans....wondering if that might be good to do now in case the present administration provides some type of forgiveness. Thanks!

Hi! Yes, commercially held FFELP loans are indeed a tricky category. If you have one, I’m sure you know that most of these borrowers have been left out of the pandemic-era payment pause. Though these are federal student loans, policymakers’ decisions beginning in the wake of the 2008 financial crisis and continuing through today have kept borrowers with these loans from accessing many of the benefits available through the federal student loan program.

Earlier this year, the Biden administration included commercially-held FFEL borrowers who had defaulted on their debt in the payment pause. At the time officials said it was legally easier to include borrowers who had defaulted on these loans than those who are still paying on them (for more on that, click the link above).

All that is to say historically, commercially-held FFEL loans have been left out of a lot of federal student loan benefits. Borrower advocates have been pushing for that to change and it’s hard to say whether they’ll be successful.

EDIT: Fixed the below paragraph thanks to the very helpful below comment, which is correct!

If you are considering consolidating, I would just make sure that you’re comfortable with whatever the new interest rate might be on the debt and that you aren’t working towards having your debt cancelled under income driven repayment. (or you haven’t made too much towards it). Once you consolidate any progress made towards forgiveness under income driven repayment will be wiped away and the clock restarted!

For people who are in default and kind of backed up against a wall, what is the remedy here? Interest keeps accruing, obviously making it much less likely that the debt will ever be paid off. Is an attorney a possible solution? And where does one even find a student loan attorney?

Borrowers who are in default on their student loan can get out of default in two main ways: through consolidating their debt into a new loan that they repay or to rehabilitate the loan, involves making nine on time payments in a period of 10 months. These payments can be tied to your income.

As for student loan lawyers, a lot of times if you contact your local bar association, they have recommendations for attorneys that work on student debt. In addition, Legal Aid and other organizations that serve low-income clients often work on student loan issues.

Many universities have endowments that are staggeringly large. In cases such as these, some have had subsidies for students, allowing them to attend at no cost. (I believe Harvard has a program such as this?)

My question is why won't these universities extend similar subsidies to other students?

For example, assuming a cost of $250,000 for a four-year degree, one million students could be subsidized for $250 billion. By borrowing this amount from the US Treasury, the university system could use their endowments as collateral. Then, by using current charitable contribution laws, this amount could be amortized over a thirty year period. It allows tax benefits for donors to the university, and alumni, gets government on the side where forgiveness could be Congressionally palatable, and would allow these students to achieve their goals, and hopefully contribute to society.

Basically, it's letting the universities borrow money at a lesser interest rate, donate it to scholarships, and repaying it over a longer period of time. Everyone wins!

(I am not suggesting Harvard grant a million degrees. I am suggesting that these universities combine endowment investments and come up with a plan to mitigate the current student loan situation.)

This is an interesting idea and there has been lots of controversy over the ways universities use endowments, particularly after the pandemic when students were sent home, but tuition still stayed the same.

In the past, some lawmakers have proposed taxing university endowments differently to encourage schools to spend them in ways that support students or lower tuition.

Would it cover graduate school debt?

I assume this is in reference to student debt cancellation. Many of the proposals on the table do include graduate student debt, though some have income caps (so borrowers making over a certain amount of money wouldn't be eligible or wouldn't be eligible for the full amount of forgiveness).

I assume this is in reference to debt forgiveness proposals? It's hard to say what will actually happen, but proposals on the table do cover graduate student debt. Still, some proposals have also indicated there would be an income cap, so borrowers earning over a certain amount of money wouldn't be eligible for debt cancellation.

Any help incoming for PSLF folks who simply have the wrong type of federal loan to qualify? 10+ years of service, and I have an older type of federal loan that “can’t be forgiven” despite it being basically the same type of loan.

For now, the only way to qualify for PSLF if you have an older loan is to consolidate into a Direct Loan, which would wipe out any previous payments you made towards forgiveness and restart the clock.

Borrower advocacy groups have called on the Biden administration to wipe out the loans of public servants who have clearly been paying on their federal student loans for 10 years, but it's not clear if those proposals will come to fruition.

Favorite cocktail? Also if you could snap away or in, one law, change one policy, free up some debt or what would that snap be?

TYSM for this cocktail-related question! I enjoy many cocktails (typically something tequila-based tbh), but one of my recent faves was this Lambrusco spritz from the NYTimes.

As for one policy change, it’s hard to say as I’m not a policymaker, but one challenge with student debt that I don’t think people pay enough attention to are the very strong collection powers the government has to get student loan money back if a borrower defaults.

One example of this that I think about a lot is that borrowers’ earned income tax credit, which the government provides to working, low-income Americans, can be garnished to repay a defaulted student loan.

That approach can be counterproductive, advocates say because if you want people to repay their student loans, they need to be lifted out of poverty and the EITC is a tool to try to do that.

I paid my student loan off the old fashioned way. Can I get reimbursed if they cancel student loan debt?

As discussed in the previous question, the question of fairness to those who have already paid off their loans is probably one of the more thornier issues in the student debt cancellation debate. Polling indicates that there’s support for the idea of cancelling student debt even among some who already paid off their loans. But of course there’s a wide range of views on this issue and the question of fairness of a given policy can be a sticky and subjective one. I’d point you to the article I included in the above reply for a sense of how advocates and critics of student debt cancellation are thinking about this question!

What's your favorite type of taco?

Thank you for this question!! It's hard to say what my favorite taco is, but I do have a soft spot for the fried chicken taco at Guero's, a restaurant I used to frequent when I lived in Brooklyn!

Are student loans mandatory? Why did so many people receive them while apparently not having a job or a family that could help them out? Is it even fair for student loans to be completely forgiven?

Student loans aren’t mandatory, but for a whole host of reasons, including wage stagnation and Great Recession-era budget cuts to public colleges, even the cheapest options for college have become unaffordable for many students and families.

For example, more than 50% of community colleges are not affordable to low-income students, according to a recent report. This uptick in college costs has happened as a college degree has become an increasingly important ticket to a stable job.

As for whether student debt forgiveness is fair, I won’t take a position on this, but there’s recently been a lot of back and forth in academic research, op-eds and elsewhere about this question!