Cancellation of student debts would represent long-term economic relief

To complete her master’s degree in Public Health, Paola La Santa Ortiz took out student loans totaling about $6,000. While working as a public school teacher, she made monthly payments for three years, but that only covered the interest she was accruing, as her outstanding balance had barely changed when she began her doctoral studies four years ago.

Now, he has an outstanding balance of over $240,000. Since you took the loans at different times, on some items you will pay interest ranging between 2% and 7%.

If I had not had the opportunity to have the loans, I would not have been able to do my doctorate. There is the tuition, but there is also the additional cost of living for students. I have two girls, I have a home, we have to pay for the purchase, transportation, housing. With a doctoral program, the time one has to do other things, a job, is almost impossible,” said La Santa Ortiz, a resident of Barranquitas.

He finished his doctorate in Chiropractic in June and has not yet had to start repaying the loans, as the moratorium established by the federal government is still in force. The announcement made by the President of the United States, Joe Bidenon Wednesday about the cancellation of up to $20,000 in student debt for certain individuals gives him hope that, little by little, he will be able to reduce the principal of the money that he foresees to be paying for the next decades.

“It’s definitely a relief because you can better plan your monthly payments,” he said. “It is a good indication that the federal government is taking into account and is realizing the pressures on those of us who have very large debts in student loans and that is why we cannot contribute as much to the local economy. In my case, for example, I cannot aspire to buy a house because when they see such a large amount in student loans, the (mortgage) banks are going to back down, ”he indicated.

On Wednesday, President Biden announced debt cancellation of $10,000 in federally-backed student loans for individuals making less than $125,000 a year, or $250,000 for households with couples filing jointly. The amount to be forgiven would increase to $20,000 in the case of undergraduate students who took loans and received Pell grants, awarded to individuals with low economic resources, according to information reviewed by The Washington Post.

Similarly, the Biden administration will order a revision of the regulations to establish that a person who obtained student loans at the undergraduate level will not issue payments greater than 5% of their monthly discretionary income, indicated the director of the White House Domestic Policy Council , Susan Rice, before the media after Biden’s announcement. Rice also noted that only loans taken out prior to June 30, 2022 are eligible for cancellation.

Eligibility information is available on the portal, page that yesterday showed multiple alerts about the slowness in its deployment due to the high number of visitors. Rice indicated that some 8 million individuals would automatically qualify for debt forgiveness since the Federal Department of Education you already have your information in your files. However, most of the 43 million who could benefit will have to fill out an eligibility application that will be available “in the coming weeks.”

The federal Department of Education estimated that more than 320,000 people on the island could benefit from debt cancellation. 52% of these are under 35 years of age.

If this debt forgiveness materializes, it would be an important help for professionals who have been paying loans for years, said teacher José Rivera, who still owes about $2,000 of the $7,500 he borrowed more than two decades ago.

“I did the first loan because I needed mobility and, within the university, they told us ‘use it to buy books, to solve with a cart’. The first need was that. On other occasions I took out loans because after completing a bachelor’s degree in Secondary Education in Mathematics, I decided to do a bachelor’s degree in Electrical Engineering and the Pell grant did not cover me,” he recounted.

He has kept making payments on his student loans in the last two years, despite the fact that there are moratoriums that allow him not to pay, since he pointed out that the payments amount to about $55 a month. About five years ago he tried to take advantage of a debt cancellation plan that benefits teachers who have worked for more than 10 years in public schools, but did not qualify. The reason he received, he indicated, is that the campus where he worked at that time presumably did not have enough Special Education enrollment, although he assures that the explanation did not make sense to him.

“I am tired of hearing people say how you can pay off loans. I always hear that they say you can cancel your loans, but almost nowhere do I hear someone tell me ‘I canceled them,’” said Rivera, who has 28 years of experience as a teacher.

Under the criteria that have been released, Rivera believes that he would qualify for Biden’s debt forgiveness. However, he expressed his frustration that since Wednesday he has sought more information on the federal government’s web pages and is getting little.

The cancellation of these debts will be important, particularly to ensure that more young professionals stay on the island once they complete their studies, said representative José Bernardo Márquez. “There are people with a lot to contribute to Puerto Rico and that, probably, with that interest and that vocation, they incurred these loans, but right now Puerto Rico cannot offer them the economic conditions to make a future here,” said Márquez. , one of the co-authors of a resolution to study the profile of those who obtained student loans on the island.

The information that the federal government is expected to offer later will be crucial to understand the impact it will have on debtors in Puerto Rico, said Aníbal López Correa, who is in the process of finishing his doctoral degree in Curriculum and Teaching of the University of Puerto Rico (UPR).

He began taking student loans to pursue a master’s degree in Educational Evaluation at the UPR. She borrowed enough money to cover a second master’s degree in Data Science at the University of Granada, in Spain. He stopped taking loans without even finishing his doctoral degree because his debt already exceeds $100,000, a figure that skyrocketed as the costs of studying at the UPR became more expensive.

“I decided to go full-time, so the dissertation writing process slows down,” he said.

Canceling part of your debt would allow you to pay a lower monthly amount when the moratorium expires in December. This will be of great help, he said, if he manages to benefit from a debt relief plan established by the federal government since he works in a non-profit organization with a 501(c)3 tax exemption, under which all his debt would be canceled after issuing 120 monthly payments.

“With the salaries in Puerto Rico, it is very challenging to pay student loans. That is why we see that many professionals leave the island”, he said. “One plans, one decides to educate oneself a little more, but by making higher education more expensive, it is left in the hands of the individual to get into debt and then live in a precarious context,” he added.

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