CM logo

Latest News

Latest from Project Morry

How Public Service Loan Forgiveness Impacts Project Morry Students and Alumni

How Public Service Loan Forgiveness Impacts Project Morry Students and Alumni

By Eric Beriguete, Project Morry Director of College and Career Readiness

Many of our students follow a traditional path by attending college, obtaining a college degree, and securing a well-paying job. However, this path does not reign the same for our Black and Latinx students. Debt is a factor in preventing financial freedom. For those that attend college, student debt only adds to the burden of trying to grab hold of the adage that education is the great equalizer.

Debt Impact on Students

Looking at higher education as a whole, the increased cost of attendance, difficulty to see the return on investment of getting a degree, and predatory student loan providers, many students prefer not to attend college, but Project Morry students strive to overcome the odds. Student loans present a real challenge to building wealth for our communities due to the long-term impact of preventing social mobility.

Upon graduating high school, many of our PM students and various Community/State Colleges, Ivy Leagues, and HBCUs. Whether our students obtain a degree or not, many end up with student loans. Some students can do everything right and still pay more than their original loan amount, only to have spent years paying off the interest without reducing the principal loan. We push students toward higher education to understand the long-term cost in hopes through enough financial counseling regarding subsidized and unsubsidized loans that students will be able to make sound financial decisions. However, the true impact of taking out loans manifests after graduation. The overall payments do not start until

Hardships may arise and push students to default or go into forbearance, damaging their credit scores and affecting their ability to buy a home, a car, or even qualify for other loans. Student loans in this job market mean consciously taking on a long-term financial burden with limited return on investment.

Impact of PSLF and Biden’s Plan

Originally PSLF (Public Service Loan Forgiveness) was intended to reward graduates working in the public sector by making 120 qualifying payments over ten (10) years resulting in debt cancellation. In the past, about 90% of borrowers were rejected from qualifying. The high rejection rate stems from a lack of programmatic clarity, misleading loan information, and general mismanagement of the forgiveness program. Now, limited waiver loosens the requirements, allowing any qualifying payments and any type of federal loan, and is already approving many past borrowers. The PSLF waiver application (closing October 31st, 2022) is a step in the right direction to reduce the burden student loans place on many of our communities. With the introduction of the Biden-Harris 10-20K loan forgiveness, borrowers will receive up to $10,000, or if they are a Pell Grant recipient, they will receive up to $20,000, as long as they have federal student loans. The forgiveness will either cancel out the entire debt, minimally or substantially reduce the repayment process. Any kind of debt forgiveness provides hope and genuine support to many in our community.

Is this enough?

The changes to PSLF and the Biden-Harris Forgiveness provide relief to many borrowers and a step in the right direction; however, it does not address the root issue with student loans. As reported by AP News, “Black borrowers on average carry about $40,000 in federal student loan debt, $10,000 more than white borrowers, according to federal education data. The disparity reflects a racial wealth gap in the U.S…” This limited PSLF and one-time forgiveness do not address the root issue within this. On a micro level, students are consciously forced to take out loans to finance their futures on the basis of hope for a better future. On a macro level systemically education not being free creates barriers and replicates cycles of inequality for those unable to afford an education.

Attending a higher ed institution is unnecessarily expensive for a limited return. It explains why, in recent years, some of our students have decided to take alternative routes to start their careers outside of making the immediate transition from high school to a four-year institution. Once again, this country has proven that education is inaccessible unless you can financially commit to it. Effectively, subjecting a large portion of the population to crippling debt with no relief or limited access to success.