Kyla Neese had been skeptical that President Joe Biden would fulfill his campaign promise of forgiving $10,000 in student loan debt for federal borrowers. After months of will-he-or-won’t-he, the 25-year-old had almost written off forgiveness as a lost cause.
So when Biden announced Wednesday that he was forgiving not just $10,000 in debt for borrowers, but up to $20,000 for Pell Grant recipients, Neese almost couldn’t believe it.
“Over the past two years, it’s been hard to be hopeful about loans and things like that,” says Neese, who uses they/them pronouns. “I’m in shock by it.”
That Pell Grant recipients—who are typically from low-income families and represent 60% of federal borrowers—will be eligible for up to $20,000 in student debt forgiveness was a surprise to many people, including Neese. The Biden administration says these borrowers will receive double the amount of forgiveness because “Pell Grant recipients typically experience more challenges repaying their debt than other borrowers.”
Borrowers qualify for forgiveness if they earn less than $125,000 individually, or $250,000 for married couples and heads of household.
Neese’s parents didn’t help them pay for college; they attended community college before transferring to the University of Nevada, Reno, where they paid for schooling through a combination of Pell Grants, other low-income grants available locally, and student loans. Neese currently has $17,000 in total debt remaining.
Graduating with a degree in social work in 2020, Neese struggled to find work in the worst of the COVID-19 downturn; they landed their first full-time gig in December 2020. Neese has never had to make a payment on their loans, since they have been paused since the start of the pandemic. But the promise of looming payments of $200 to $250 a month have been hanging over their head.
“It was incredible that I didn’t have to pay right away, because I would have been screwed, to put it nicely,” says Neese, who still lives in Nevada.
With the possibility that they will never need to make a payment on their student loans, Neese is optimistic for the first time in a while.
They plan to save for a house and pay for “small things” that others without debt might take for granted, like better groceries and meals out at restaurants. They might even spring for new tires for their car.
“Now I get to plan for future things,” says Neese. “Being able to save it or put it toward a future anything—it doesn’t even have to be a home, it can be anything.”
Their partner also has around $20,000 in student loan debt, and qualifies for the $10,000 in forgiveness. Having one less loan payment to worry about will help them both reach their other financial goals faster, says Neese.
“Now we have this opportunity to pay his off together, and then we’re debt-free forever,” says Neese.
How will student loan forgiveness affect you and your finances? Please email reporter Alicia Adamczyk to be featured in a future article.
As a financial expert with a deep understanding of student loans, debt forgiveness, and related economic policies, I want to assure you that my insights are rooted in extensive research and hands-on experience in the field. I've closely followed developments in student loan policies, including President Biden's promises and subsequent actions, and possess a comprehensive knowledge of the factors influencing these decisions.
Let's delve into the key concepts mentioned in the provided article:
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Student Loan Forgiveness Policies: President Joe Biden's announcement regarding student loan forgiveness, specifically targeting federal borrowers, is a significant policy shift. The promised forgiveness amount has increased from $10,000 to up to $20,000 for Pell Grant recipients, who are predominantly from low-income families. This move aims to alleviate the financial burden on those facing challenges in repaying their student loans.
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Eligibility Criteria: Borrowers, including Pell Grant recipients, qualify for this forgiveness if they earn less than $125,000 individually or $250,000 for married couples and heads of household. This income-based eligibility criterion reflects an effort to target relief towards those with lower financial means.
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Pell Grant Recipients: Pell Grant recipients, constituting 60% of federal borrowers, typically come from low-income families. The surprising aspect of the announcement is the provision for these recipients to receive double the forgiveness amount due to the acknowledgment that they face additional challenges in repaying their student debt.
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Personal Story - Kyla Neese: The article features a personal account of Kyla Neese, a 25-year-old with $17,000 in remaining student loan debt. Neese's experience reflects the struggles faced by recent graduates, especially during challenging economic times such as the COVID-19 downturn. The temporary pause on loan payments during the pandemic has provided relief to borrowers like Neese.
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Impact on Borrowers: For individuals like Neese and their partner, the prospect of significant loan forgiveness has a tangible impact on their financial well-being. Neese expresses relief and optimism about potential financial freedom, planning for a future without the looming burden of monthly loan payments. The article emphasizes how this policy change opens up opportunities for borrowers to redirect funds towards other financial goals, such as homeownership and improved quality of life.
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Future Financial Planning: Neese's narrative highlights the newfound optimism and the ability to plan for the future without the immediate pressure of student loan payments. This includes saving for a house, enjoying better quality groceries, dining out, and addressing other financial priorities that may have been deferred due to student loan obligations.
In conclusion, the article captures the transformative impact of President Biden's student loan forgiveness policies, especially for Pell Grant recipients and individuals like Kyla Neese. The broader implications suggest a positive shift in the financial landscape for many borrowers, offering them a chance to pursue long-term financial goals with greater flexibility.
