People Who Get All Their Student Loan Debt Canceled Discuss Financial Freedom

  • On Wednesday, President Joe Biden announced the long-awaited cancellation of student loans.
  • It canceled $10,000 in loans for federal borrowers and $20,000 for Pell Grant recipients.
  • Insider spoke to two debtors who will have all of their debts erased from the announcement.

Jaymie Horak’s life changed this week.

The 31-year-old from Portland, Oregon took out $50,000 in Pell Grant loans to put himself through college. Horak was a first-generation college student, and beyond the college scholarships they received, there was “literally nothing at all” to help them pay for the rest of their education other than loans.

Prior to the pandemic, Horak, who works in human resources, had paid off his loan burden of around $20,000. The payment break allowed them to save and put down a down payment on a condo, but they feared they might not be able to pay their mortgage when student loan repayments resumed.

Then came the news on Wednesday: President Joe Biden was canceling all of their student loan debt.

“When I saw the 20,000 for people who had the Pell Grant, I liked that I lost it,” Horak said. “I could not believe it.”

Horak is one of approximately 20 million borrowers who have had all of their student loan debt forgiven. In a long-awaited announcement, Biden confirmed he will forgive up to $20,000 in student debt for Pell Grant recipients earning less than $125,000 a year, and other federal borrowers will be eligible for relief of up to to $10,000. That, coupled with Biden’s fifth extension of the student loan payment pause through Dec. 31, has given millions of borrowers far more breathing room. Some say it will change their lives.

Aidan Smith

Aidan Smith.

Aidan Smith

Aidan Smith, a recent college graduate and Pell scholarship recipient living in New York who is seeing his remaining balance of $7,000 wiped out, told Insider he recognizes how lucky he was to have attended community college. and have accumulated a manageable student debt balance. For him, Biden’s announcement was an indicator of how people’s lives “are going to transform.”

“They’re going to have a good shot at moving forward without having to go through this really brutal and debilitating student debt,” he said. And while he wishes Biden could have gone further to ease the burden on those more in debt, Smith said that money back in his pocket would allow him to afford future investments.

“When I saw the whole amount, the whole balance, I was thrilled, relieved, and I thought, wow, this is kind of the first time I’ve felt directly impacted by something like a political order or adopting something,” says Horak. “It was the most direct it has ever touched me.”

President Biden delivers remarks at the White House

US President Joe Biden, flanked by Education Secretary Miguel Cardona, speaks on student loan debt in the Roosevelt Room of the White House August 24, 2022 in Washington, DC. President Biden announced measures to forgive $10,000 in student loan debt for borrowers who earn less than $125,000 a year and cap payments at 5% of monthly income.

Alex Wong/Getty Images

“I don’t worry about losing my house”

During the pandemic, Horak wanted to move and even try to buy a house – something that seemed impossible for someone from San Diego. In the back of their heads was Biden’s campaign promise to waive $10,000 per borrower, even though they were skeptical of materializing.

“I was like, okay, I’m not going to put up with it, because it’s hopeless,” they said. “But like maybe, maybe, so I just kept waiting.” They decided to take a risk and access homeownership while their $20,000 in loans remained untouched during the pandemic payment break.

“I had a moment earlier this year where I wondered, do I make a down payment on a condo or do I pay off my loans?” they said. They went with the deposit.

Horak isn’t the only one feeling the anxiety they felt before Biden’s announcement. Not only were borrowers having difficulty planning financially during the pandemic due to the uncertainty of relief – Biden also waited just a week for student loan payments to resume to provide loan forgiveness. , keeping borrowers on the edges of their seats until the last minute.

“Honestly, I don’t know what would have happened if they had restarted and I had to pay what I was paying before. The most important thing for me is that I don’t worry about losing my house,” Horak said.

‘I do not receive anything. This is a loan that should never have been granted to begin with.

Some Tories called the relief unfair and positioned the cancellation as something that will now burden other taxpayers.

“Sad to see what is being done to corrupt voters,” said Sen. Mitt Romney, a Republican from Utah. tweeted. “Biden’s student loan forgiveness plan may win votes for Democrats, but it fuels inflation, burdens taxpayers with the financial obligations of others, is unfair to those who have paid their own way, and creates irresponsible expectations. “

It’s an argument Biden has chastised, in turn questioning whether it’s right for taxpayers to subsidize billion-dollar corporate tax breaks. It is also an argument that debtors who see the relief reject.

“I think some people feel like these expenses are paid for by the taxpayer and taken away from them,” Horak said. They noted that they are taxpayers, and that many programs — including Social Security, food stamps, and tax breaks for businesses — are funded by taxpayers who don’t use them.

“I actually had an argument with someone very close who said to me, for example, you have to give 10,000 to your family. They don’t give me anything. It’s a loan that doesn’t should never have been granted to begin with,” Horak said. “It should never have been approved. I was 18. I came from a low income family. I couldn’t get a store card for 500$, but I ended up being able to take 50 $000. Anyone watching this should be able to see something is wrong here.”

Despite conservative criticism of Biden’s broad relief, Smith said the president’s announcement was “really solid policy,” especially given the focus on low-income borrowers like Pell Grant recipients. He thinks it will make meaningful headway for Democrats in the November election.

“I think people react really positively when their material situation improves,” Smith said. “I think this will call young people and so many people suffering from such debilitating debt to the polls, and will be such a crucial part of the Democratic coalition going forward.”

In the end, Horak said, forgiveness is almost like an apology for help they haven’t received before.

“I’ve always felt like I just have to figure it out. I just have to work with a system that is predatory and is going to take advantage of me left and right. I have to make sure I’m five steps ahead “, they said. said. “For something to come, it was like, actually, you’re fine right now, we’re going to deal with it – it’s unreal.”

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