One in 8 Tennesseans are waiting to hear if President Joe Biden will forgive some portion of federal student loan debt.
How much debt the government would forgive per borrower is still up in the air – in May, the Washington Post reported that the White House was planning to forgive $ 10,000 per borrower.
Knox News spoke to higher education experts to learn who in Tennessee would benefit from a $ 10,000 loan forgiveness plan.
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How much student loan debt does Tennessee have?
According to federal data from December, Tennessee residents have $ 31.4 billion in student loan debt.
That’s about $ 2 billion higher than the average of $ 29 billion per state, according to data complied by the Education Data Initiative.
Across the US, there’s a $ 1,606 trillion outstanding federal student loan balance.
More than 43.4 million people have federal student loan debt, making it the second-highest consumer debt category after mortgages, according to the US Department of Education’s Office of Federal Student Aid.
A substantial share of that student debt is loans taken out for graduate and professional degrees for professions like doctors and lawyers.
“That’s a little bit of a different animal than undergraduate student debt because these are people who probably have a little bit more earning power, and they’ve experienced college already versus someone trying it for the first time,” said Robert Kelchen, a higher education professor and the head of the Educational Leadership and Policy Studies at the University of Tennessee at Knoxville.
Who has student debt in Tennessee?
There are more than 862,000 borrowers of federal student loans who live in Tennessee. More than half of them are younger than 35. In Tennessee, fewer people are likely to have student debt, but those who do have a higher unpaid balance, according to the Education Data Initiative.
The state’s average debt per borrower is $ 36,418, just below the nation’s average.
About 32% of Tennessee borrowers owe less than $ 10,000, according to federal data. That means more than 271,000 people would have their student loans completely forgiven if the floated plan were enacted.
“For borrowers who don’t owe that much money, say if they went to a community college or if they’re most of the way done paying (off their loan), $ 10,000 wipes their slate clean,” Kelchen said.
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Another 20% owe $ 10,000- $ 20,000 in student debt, and the rest owe more than $ 20,000.
To have any burden of that debt lifted could help borrowers feel like they can move forward in their lives, Kelchen said.
“The impact of student debt is that money students can not spend on something else,” Kelchen said. “It can mean people may choose to delay buying a car or a house. They may delay things like getting married or having kids because those are also expensive.”
What are some ways to reduce the student debt burden?
Kelchen said one way to reduce the student debt burden is to make college more affordable by lowering tuition or providing more financial scholarships and grants.
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“Tennessee has done a lot over the last five years to greatly bring down the net price of community college sector,” Gentile said. The Tennessee Promise grant provides two years of free tuition to any of Tennessee’s community colleges or colleges of applied technology.
A study by Gentile and two other higher education experts found that fewer first-time, full-time students took out loans for college after the Tennessee Promise program started in 2015. For those who did continue to take out loans, students were taking out less money than before.
This year, the Tennessee Higher Education Commission voted not to raise tuition across all its colleges and universities.
According to the Tennessee Higher Education Fact Book, $ 14,509 is the average annual “net” cost of a public four-year college in Tennessee. This “net” cost includes tuition, fees, books, supplies, rent, food and other living costs and then applies to the average federal financial aid award. At community colleges, the average annual price is $ 6,063.
Schools could also find ways to bring down costs and pass those savings on to students.
“If you spend less on students, you can charge them less money,” Kelchen said. “But that route means things like larger class sizes and not spending as much on facilities.”