By Nadra Nittle
Originally published by The 19th
All Myshelle Bey’s 4-year-old daughter wants for Christmas is a Barbie Dreamhouse. The toy costs around $200, which is cost prohibitive for the single mother from Boston.
“She has had her heart set on it all year,” Bey said. “I’m sitting here determining which bill would I be OK with being behind on to give my child the Christmas that she deserves.”
As it is, paying for basic necessities such as utilities, rent and groceries and managing her daughter’s severe asthma has not been easy for Bey. Then, in October, the 29-year-old had to resume making student loan payments after the pandemic pause ended. Those payments are $150 per month, which add to the financial pressures Bey — who is pursuing a bachelor’s degree in behavioral science — now faces. Her student loans are under $10,000 and stem from her time at another college, which she left without a degree.
With no family members she can turn to for money and the return of student loan payments, Bey is particularly feeling the financial pinch this holiday season, and she’s not alone.
In a November U.S. News and World Report survey of 1,202 respondents with federal student loan debt, 76 percent say that the return of payments will reduce their holiday shopping budget. Fifty-four percent say they will spend less on gifts for family and friends, 41 percent say they will have smaller holiday meals, and 33 percent say they can’t afford to travel to see friends or family.
A Credit Karma poll of 1,000 adults from October identified a similar trend. It found that 28 percent of Gen Zers and millennials say student loan repayments will make the holiday season unaffordable this year compared with 15 percent of Gen Xers and four percent of baby boomers. In addition, 32 percent of Gen Zers and 25 percent of millennials say repayments will make traveling home for the holidays too expensive.
“Ever since I’ve started paying back student loans, it has made life a lot harder,” said Bey, a former participant in one of the housing programs run by Economic Mobility Pathways (EMPath), a Boston-based national nonprofit that helps low-income families working toward financial stability. “Yes, single moms are offered certain programs for free [Christmas] gifts, but half of the time it’s not gifts that really are for your child’s age range, depending on where you’re getting it from. My daughter doesn’t really care for building blocks and Legos.”
In June, the Supreme Court blocked President Joe Biden’s plan to give borrowers up to $20,000 in student debt relief, an amount that would have wiped out Bey’s balance entirely. Despite that blow, the Biden-Harris administration has continued to offer forgiveness for select groups of borrowers. On December 6, the administration announced that it had approved $4.8 billion in relief for 80,300 borrowers as a result of fixing long-term inaccuracies in both the income-driven repayment forgiveness and Public Service Loan Forgiveness programs. Altogether, the Biden-Harris administration has forgiven close to $132 billion for about 3.6 million Americans. Borrowers who have received this relief include those with total and permanent disabilities and individuals defrauded by for-profit colleges.
The administration has also launched the SAVE plan to make loan payments more affordable than they ever have been — waiving payments for single borrowers earning under $15 per hour and allowing higher earners to save more than $1,000 on payments annually. After the Supreme Court decision, the Education Department announced that it is instituting an “on-ramp” approach to repayment through September 30, 2024, to spare borrowers who miss monthly payments from being moved into default, reported to credit bureaus or directed to debt collectors.
Still, the Biden-Harris administration faces pressure to do more to alleviate student debt, which amounts to over $1.6 trillion nationally. After the administration announced recent plans to relieve student debt for borrowers in select circumstances, progressive lawmakers, including Sens. Elizabeth Warren and Bernie Sanders, wrote to the administration to ask it to broaden both the borrowers eligible for relief and the amount of relief that would be granted under a potential plan. The Education Department’s rule-making committee considered proposals for a new debt relief program during hearings that took place earlier this month, although it is not slated to announce a new forgiveness plan until May.
Augustus Mays, vice president of partnerships and engagement for Education Trust, which advocates for all students to achieve academic excellence, would like to see the Biden-Harris administration forgive student loan debt broadly.
“The Biden administration has done a number of things right to support borrower repayment, for example, the SAVE plan that could potentially cut payments in half,” Mays said. “For many Americans, that is helpful. But it’s not enough for those Black and Brown students who are already facing an unequal wealth distribution when they’re entering college but also when they come out of college in their careers and jobs that they have in comparison to their White peers. What they need is much more federal support in alleviating the cost of college tuition.”
According to the Education Trust, Black students represent just 14 percent of the college-age population but hold 25 percent of federal student loans. Black women are particularly likely to have student debt, graduating with $38,800 in federal undergraduate loans on average, which is a greater amount than any other demographic, Education Trust found. In addition, Black women are more likely than others to default on their loans.