As Flint Hills Technical College opened a new semester on Monday, more than a third of undergraduates were building a potential mountain.
At Emporia State University, based on recent numbers, nearly two-thirds of undergraduates do.
The mountain is financial debt resulting from student loans. It can take years or decades for former students to repay these loans and interest to be debt free.
“I felt very defeated, because I basically had a whole mortgage and nothing to show for it,” said Skylar Blake of Emporia.
Blake’s debt mountain range is in the range of $100,000. He received private loans for three years to major in French at the private Boston University. But then the loans stopped.
“I had to give up, because I couldn’t go anymore,” Blake said. “No degree, no funding.”
Blake returned to Kansas and enrolled in ESU on a scholarship. But then the new coronavirus arrived and he had to give up again.
When the pandemic hit in March 2020, the federal obligation to repay government student loans was frozen. In late December, President Joe Biden extended the interest freeze and accrual through Sunday, May 1.
“We know millions of student borrowers are still dealing with the effects of the pandemic and need more time,” Biden said in a statement.
“It was really awesome that they extended it,” said Erica Clark, financial aid officer at Flint Hills Technical College.
After crunching complex numbers, Clark said 63% of FHTC undergraduates received financial aid during the fall semester. But only 39% of them took the help.
At ESU, Student Loans Coordinator Darcy Johnson reported that 64% of undergraduate students received federal loans in the 2019-20 quarter. A typical Kansas resident will pay $3,467 in tuition and fees for the spring semester.
Students who receive loans do not have to repay them right away, or even right after graduation.
“A student is not required to make loan payments while in school, half-time or longer,” Johnson said. “Then they have a six-month grace period after leaving school.”
So, for now, current students are receiving interest-free loans. Blake’s current situation is even better as he works at Starbucks.
“They pay for my tuition at ESU,” Blake explained. “I’m actually doing a whole new major and doing it again, but it’s free.”
But once the federal loan pause is lifted, the financial headaches could return for many more.
The Associated Press reports that more than 36 million US residents have outstanding student loans. They pay an average of $400 per month for them.
The total debt is over $1.37 trillion, nearly 67 times the current Kansas state budget.
Johnson said the reimbursement pause had no direct impact on ESU. It is simply the middle part of an agreement between student borrowers and the US Department of Education through private loan officers.
“Most of the work we do is upstream — the processing,” Johnson explained.
But are the hands of universities really free from responsibility?
“Universities are allowed to lend money to 18-year-olds without collateral, but with an obligation to repay it that will never go away,” Emporia City Commissioner Jamie Sauder said.
As a realtor, Sauder is concerned about the long-term economic impact.
A September 2021 survey by the National Association of Realtors found that 29% of student loan holders say debt has impacted their ability to buy a home.
“It adds another hurdle for a potential buyer to jump through,” Sauder said. “Their debt-to-income ratio prevents them from getting a mortgage.”
Sauder added that students could never receive a home loan the same way they do student loans.
In some cases, former students find it more beneficial to delay repayment of their loans. Ngoc Nguyen wrote in an email that seven years after graduating, he can fully pay off a $30,000 debt.
“But I wouldn’t because I can use my money for other things and earn more than the $100 interest rate,” Nguyen wrote.
In fact, the pandemic pause has helped some people munch on their mountain. The report from estate agents found that 38% of them are now “closer to paying off their debt”.
Blake’s Boston loan repayment is on hold while he earns a degree at ESU. Her parents have helped with the earlier payments, but there’s not much they can do.
“My family has no money, really,” Blake said. “They will work until they die.”
Wisdom Cole, national director of the NAACP Youth & College, told The Associated Press that there is a simple answer to student loan mountains: raze them.
“To provide financial relief during omicron, cancel student debt,” he said. “To revive the economy, cancel student debt. To close the racial wealth gap, cancel student debt.
But Blake said that even if his ESU loans were canceled, “I would still have a ton of debt.”
As President Biden talked about debt forgiveness, Johnson said former students should be prepared for the financial worst, whenever it comes along.
“They definitely have time now to plan and make sure they know who they’re sending their payments to,” Johnson said.
Income-based repayment plans are available, Johnson added. New temporary breaks are also possible.
A Gazette reader recommended the “Ramsey Solutions” 10-point approach to paying off student debt. The online version recommends applying all increases to debt payments and calls debt forgiveness an empty promise.
If he had the power, Blake would make public college education free.
“All public institutions should be free,” he said,
But for now, Blake’s hopes of freeing himself from debt rest on earning an electrical engineering degree from ESU.
“I feel like one of the lucky ones with a profitable degree,” he said. “Even if I refused to pay it…I would probably be homeless.”
Johnson noted that former ESU students are encouraged to make an appointment for financial counseling by calling 620-341-5257. They can go to the financial aid office in Plumb Hall or host a Microsoft Teams conference.
Johnson also recommended that students and borrowers check the StudentAid.gov website to make sure their contact information is up to date.