'There is no trust now': Student loan borrowers respond to Supreme Court decision

Friday's Supreme Court decision striking down President Biden's student loan cancellation plan has left a lot of borrowers wondering: Where do we go from here?

"I would say Congress needs to pass this, but that's not going to happen," says Graeme Strickland, a 25-year-old borrower in Raleigh, N.C. "It's become a culture war around this issue. And like, this is my income. This affects the money I'm able to spend on groceries."

Strickland attended the University of North Carolina, Chapel Hill, as an in-state student. In order to attend, he had to take out roughly $30,000 in federal loans, which is on par with the national average for a bachelor's degree from a public institution.

He graduated in 2020 at the height of the pandemic, and has yet to consider loan payments or interest yet – both have been on pause since he was a student. Now, with Biden's student loan relief plan officially dead, and payments set to resume in the fall, Strickland has resigned himself to his new debt-laden reality.

"So in terms of loan forgiveness, where do we go from here? I don't think there's anywhere we can go."

If Strickland sounds defeated, he's not alone.

For years, borrowers have been left in a holding pattern waiting for the path to debt cancellation that President Biden promised on the campaign trail. His administration finally announced his plan for student loans last August, canceling up to $20,000 for qualifying borrowers.

But the Supreme Court's recent ruling has overturned the program, and put the final nail in the coffin on widespread debt relief.

"There was no trust before. There is no trust now."

Carolina Rodriguez spends her days talking to borrowers like Strickland at New York's Education Debt Consumer Assistance Program (EDCAP). She says such feelings of defeat and resignation aren't unusual.

"There was no trust before. There is no trust now," she says. Most borrowers she speaks to these days are more focused on other paths to forgiveness, such as Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) plans.

Under the Biden administration, she's seen investment in these programs and a deluge of changes to the student loan landscape: "We sometimes joke in the advocacy community, it's like a decade's worth of changes in two years."

And with the influx of new policies has come a new relationship with deadlines. Rodriguez says her staff has come to expect extensions and last minute changes – so have borrowers. She rarely gets calls anymore about the impending restart to federal student loan payments because, she says, borrowers have been here before.

But she's expecting a surge as the summer comes to a close, and payments do finally resume: "A lot of the borrowers are still going to be in denial that they now have to plan for this."

Michael J. Petrilli, president of the conservative-leaning Thomas B. Fordham Institute and a longtime critic of Biden's plan, understands the denial, and says the blame falls squarely on the administration.

"They were taking a big risk ... in getting people's hopes up, and now seeing those hopes dashed," he says. "This is politics, right? But I think it comes with a lot of deceit and the administration should be called out for that."

He called the debt relief program a "cynical ploy" by the administration, a harmful one: "The goodwill that could come from targeted student loan forgiveness can be put at risk by trying to provide forgiveness to virtually everyone."

Borrowers prepare for smaller budgets, more financial stress, as payments resume

Ariana Cuellar, a 31-year-old borrower from San Antonio, says the payment pause was "a gift," one that she will miss dearly. She has gotten used to small comforts like having a steady savings account and not stressing out about every "purchase larger than $20."

She has over $30,000 in student loans, which is more than what she initially took out for her degree, due to a brief period of forbearance after she graduated in 2013.

This pause has allowed her to switch careers and pay off her car, things that felt overwhelming with the weight of her student loan payments. All of her loans are federally held and, under the Biden administration's plan, she would have received $10,000 in cancellation. She remembers that the day it was announced was "really joyous" – it gave her some hope. But not enough to ease the pressure of paying interest on top of her original debt.

"I will never be able to get rid of these loans. I think even if we got that $10,000 worth of forgiveness, unless the interest rates are changed, I will not be able to get out from under it."

Now, with return to repayment imminent, she's resigned herself to a smaller budget, and more financial stress. The winding road to the Supreme Court's decision has worn her out.

"I lost faith in any sort of justice," she says. "I don't feel like it's going to get better. I don't trust the government to take care of us."

Borrowers have been frustrated with the federal student loan system for years

Biden's relief plan didn't cover all federal student loan borrowers. Initially, people who took out older Perkins loans and Federal Family Education Loans (FFEL) could qualify for the program. But, in a quiet reversal, the U.S. Department of Education changed its guidance around those loans, saying they're no longer eligible.

FFEL loans, issued and managed by private banks but guaranteed by the federal government, were once a pillar of the federal student loan program, until they were phased out in 2010. When NPR reported on the FFEL guidance change, an administration official said roughly 800,000 borrowers would be excluded from relief.

Chris and Brigid Kennedy, a married couple in South Carolina, are among those who were left out of Biden's plan because they have FFEL loans. And it is not the first time their type of loan dictated whether they received forgiveness.

Years ago, the Kennedys, who are both educators, consolidated their student loans as part of a short-lived Education Department program for married couples. What they didn't realize is that those new, joint consolidation loans would disqualify them from potentially getting their debts erased through Public Service Loan Forgiveness.

Brigid Kennedy says this recent blow is hurtful, but nothing new.

"We really do feel like it's our responsibility to pay these loans," she says. "But we've also paid the principal back about two and a half times what we took out."

Their student debt is in the hundreds of thousands, an intimidating figure for two public educators. Moreover, Chris is currently battling cancer, which means he could qualify for interest-free deferment. The couple has gone back and forth with their servicer, asking for that deferment while he undergoes treatment. They finally got an answer recently: Since their loans are consolidated into one loan, both of them would have to have cancer in order to qualify for an interest-free pause in payments.

"I just started laughing, and then I started crying because, I mean, the absurdity of the way that this is set up against us is laughable," Brigid says. The couple is now in forbearance, a less forgiving way to pause their payments in which interest continues to pile up, as they put their resources toward Chris' treatment.

Their group of consolidated borrowers won a hard-fought victory last year, getting a bill through Congress, which the president signed, to officially separate their loans and, in turn, qualify for federal forgiveness programs.

However, in another blow to the Kennedys' trust in the federal student loan system, there's been radio silence since the bill passed. The couple says the last time they got someone on the phone, they said they wouldn't see a fix until the end of 2024.

Visual design and development by: LA Johnson
Edited by: Nicole Cohen and Steve Drummond

Copyright 2023 NPR. To see more, visit https://www.npr.org.