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CHICAGO (WLS) — Nearly 2 million people Illinois are paying back student loans.
As the country waits for a ruling from the Supreme Court on President Joe Biden’s student debt relief program, our I-Team looked at how consumers can control that debt now. The ABC7 I-Team spoke with one Chicago student focusing on his future as he waits to see if some of his loan balances will be forgiven.
“I never thought I’d have the chance to go to college in the first place. My parents didn’t finish their freshman year in high school,” said Chicagoan Samer Hasan.
But, that changed in just one generation. Hassan spent two years at a Chicago community college, got a full-ride scholarship at Columbia University in New York and will soon have his masters in public policy from the University of Chicago. Now, Hasan is strapped with more than $100,000 in student loan debt, despite working full-time and receiving scholarships.
“This country, they go out of their way to forgive the PPP loans, they forgave big oil, they forgave big banks but at the end of the day, don’t you want to invest in the future of your country?” said Hassan.
But, others question the fairness to people who’ve already paid off their student loans, or those who chose not to go to college at all because of the cost. Ultimately, the U.S. Supreme Court will determine if Biden’s loan forgiveness plan will be upheld or struck down. If it remains, low and middle-income people could see relief of up to $20,000 in federal student loans.
“It would bring down my monthly student loan from $13,000 a month to $950 a month, and that is substantial,” added Hasan.
The ABC7 Data Team found that there are 1.7 million student loan borrowers in Illinois. They average $38,000 in loans. Those numbers total to almost $65 billion in Illinois student loan debt, making Illinois ninth highest in the nation when it comes to total loan amounts owed.
While students wait on that Supreme Court decision, experts told the I-Team there are steps borrowers should take now.
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“Move forward as if you’re going to have to repay all of your loans. Make a plan for that. Build your budget around that payment,” advised Amy Lins, vice president of customer success at Money Management, Inc. “Plan for the worst outcome and then be able to happy to move to the better outcome.”
For now, you can sock away those payments in a personal emergency fund. Then, go to the federal government’s loan simulator site to calculate your current payments and options.
“Use the payment calculator to find the lowest payment if that’s what you need, or the shortest payoff time if that’s what you want to do. You know, the quicker you pay, the less interest you pay,” said Lins.
You may save money on your loans by qualifying for life changes, such as a lower income or having a child since you last certified the loan.
And, if you defaulted on a loan, the Biden administration’s Fresh Start Program gives people a second chance to improve their credit by making their loan current.
“It gives them back access to things like eligibility for VA loans, eligibility for FHA loans, stopping garnishment of wages and tax refunds,” said Lins.
Since Hasan currently works at a nonprofit, he could also qualify to for another loan forgiveness program in the future, but he’s still hoping that $20,000 in debt will be forgiven.
“It can be a life changing decision. It’s the difference between saving up for a home, saving up for a future in this country, or just getting by,” he said.
There are more federal and state programs you can qualify to get help with your loans, if you are a teacher, lawyer or government worker.
Current student loan forgiveness programs:
- Teachers may qualify for the Illinois or the federal Teacher Loan Forgiveness Programs if they teach for five consecutive years in a low-income school or education service agency.
- By working for the government, military or nonprofits, you could qualify for the Public Service Loan Forgiveness Program. It takes 10 years of work to qualify but those years don’t have to be consecutive.
- Another form of relief on the horizon, a proposal to change the federal student loan plan known as an income-driven repayment plan. The change would to allow those who borrowed for their undergraduate education to only pay 5% of their income toward their loans, instead of 10%. A video about how to apply can be found here and a fact sheet can be found here.
