GREENSBORO, N.C. (WGHP) – President Joe Biden’s plan to forgive $10,000 in federal student loans for most people is right in the middle in terms of popularity: Some don’t like the idea at all, and others think the amount is too little.
The truth is that this is a step forward for an age group that has the greatest amount of personal debt – those ages 25 to 34 – but it’s far from a panacea, because the average student loan debt is more than three times that $10,000 figure.
The Department of Education reported at the end of March that there was nearly $1.61 trillion in student loan debt that averaged about $37,000 for 43.4 million borrowers.
In North Carolina, the average debt is $37,721, which ranks eighth highest in the nation, based on data posted by educationdata.org. The total student debt for the state is $49.2 billion, which is the highest among the 50 states, Washington, D.C., and Puerto Rico.
Biden’s plan, announced Wednesday, calls for $10,000 in relief for most borrowers but also, in a new twist, $20,000 for those who had Pell Grants, which are lower-income individuals and minorities who typically also have greater debt.
His program applies to individuals making $125,000 a year or married couples filing taxes jointly at $250,000 per year. The White House estimates that 90% of those affected would be people earning $75,000 or less.
The addition of the Pell Grant recipients is significant. Seven in 10 college graduates with federal loans also receive a Pell Grant, The Washington Post reported. Their debt is higher on average by about $4,500. North Carolina has had more than 200,000 Pell Grant recipients.
The District of Columbia has the highest average student debt ($54,945), followed by Maryland ($42,861) and Georgia ($41,639). All other states range through the $30,000s, except for North Dakota ($28,604) and Puerto Rico ($28,242).
If you think North Carolina’s total debt is high, check out these figures: California has $141.8 billion, Texas has $120 billion, Florida has $100.9 billion, and New York has $92.7 billion.
Our neighbors in Virginia have less debt ($42.4 billion) but the fourth-highest average ($39,165).
Snapshot of North Carolina
Educationdata.org says that North Carolinians are less likely to have student debt – there are 1,304,300 debtors in the state, about 12.5% of the population – but those who do have more of it, as noted earlier. Some facts:
- 52.3% of those debtors are younger than 35.
- About 14.4% owe less than $5,000.
- 23.0% owe $20,000 to $40,000 (average $28,619).
- 2.1% owe more than $200,000.
The average student loan debt is higher in Durham ($39,958) and Wake ($38,204) counties, studentloanhero.com calculated, where the average monthly payments are at $338 and $219, respectively.
And in greater Greensboro, student loan balances vary by as much as 20% based on ZIP code. Debtors living in 27408 owe an average or $47,544, but those in 27405 owe $39,685. All other ZIP codes are in between those figures. 27408 includes Guilford Hills and Old Irving Park, while 27405 is a much larger area on the eastern side of town from North Carolina A&T State University past Reedy Fork Elementary School.
The average student loan debt for North Carolinians was higher than the national average in the 25-and-younger, 25-34, 35-49 and 50-older age groups.
Another measuring stick
WalletHub, the financial advice network that assembles and assesses data to provide insights about our lives, developed a scale to weigh the effect of student loan debt by state.
WalletHub’s analysts developed a score for each state by weighing a variety of levels and frequency of student debt against grant and work-study opportunities that include underemployment, student jobs, paid internships and expanding grants. Each metric was rated on a 100-point scale, and a weighted average was used to rank.
North Carolina, despite its high averages and amounts, ranked No. 26 in WalletHub’s index. Its overall debt was 28th and its access to income and grants was 10th.
Because of the way the debt was offset by the opportunity for compensation, lower-income states tended to rank higher in WalletHub’s index.
West Virginia, Pennsylvania, South Dakota, New Hampshire and Mississippi made up the top five. Kentucky, South Carolina and North Dakota were in the second five.
Florida, New Mexico, Washington, California, DC and Utah were Nos. 46 through 51.
WalletHub used state rankings for debt that differed from educationdata.org, but it also showed that Southern states typically have the highest percentage of income in relation to student debt (Mississippi and Alabama were the worst).
It also showed that Hawaii and West Virginia had the largest percentage of past-due or loans in default. Massachusetts and New York had the lowest.
Is this a good idea?
Whether all of this is a good idea or not is certainly up for debate. Some suggest the plan will drive up inflation and expand the national deficit, and Republicans argue this is an advantage for college students that ignores the millions who didn’t attend college but also have debt.
WalletHub asked a group of six educators what they think about Biden’s plan, and most didn’t answer the question. Those who did cover some of both arguments.
“There are multiple problems with this,” said Tammy Johnston, an economics professor at Louisiana-Monroe. “First, it is a one-time cancellation. … Why support canceling debt that was taken on voluntarily? Would we ever support canceling car loan debt? Or how about a business loan for an entrepreneur that started a business rather than pursuing a college degree?
“People that pursue a college degree do so to improve their prospects for future employment. It is a cost and benefits situation. It costs the student to get a college degree, but it is the student that will personally benefit. The person who benefits should be the person that pays for it.”
Andrew Burnstine, a business professor at Lynn University, had a different take.
“While this action would certainly ease financial strain for millions of borrowers, it would also help restore trust in the institutions of government and their ability to deliver on implicit commitments,” he said. “This means that students who relied on federal loans — and the promise of affordable opportunity — should never have been left worse off than if they had not gone to college in the first place.”