‘What does that mean for me?’: Biden’s new stab at student-loan forgiveness has borrowers frustrated and confused

While Vitkauskas said she appreciated the president’s “fiery” rhetoric, his announcement didn’t do much to ease her anxiety as the October return of payments on the roughly $111,000 she holds looms.  

“Now what?” Vitkauskas said. “Do we have to wait longer? And in the interim, what does that mean for me? I’m still going to be in the same situation of trying to scramble to figure out how I’m going to repay.”  

The Biden administration has arguably taken the most comprehensive approach of any presidential administration to the nation’s $1.7 trillion in student debt. The president’s speech last week was the latest example of this strategy. After the Supreme Court rejected the administration’s original plan for student-debt relief, which relied on the HEROES Act, a 2003 law that says the Department of Education can waive or modify student loans during a national emergency, Biden said he would continue to pursue debt relief but ground his efforts in a separate legal authority.

In addition, Biden announced efforts aimed at making student-loan payments more manageable. He reiterated his administration’s planned sweeping changes to student-loan repayment and offered borrowers a cushion for when payments resume this fall.

“Our top priority immediately after the decision was communicating to borrowers that we have a plan of action moving forward and that we are putting in place” to smooth the return to repayment, a Department of Education spokesperson wrote in an email, “which we did.”

Read more: The Biden administration has a new strategy for student-loan forgiveness — but there are risks it could meet the same fate

But for borrowers like Vitkauskas, who have been struggling to repay their loans for years, the changes announced aren’t enough to make a difference. Though Vitkauskas has thrown money at her loan for decades, the original balance essentially doubled, in part because she wasn’t made aware by her student loan servicers until relatively recently of the ability to pay down her debt as a percentage of her income. Despite the president’s promise to “stop at nothing” to “deliver relief,” Vitkauskas said she remains in limbo about what his plans mean for her student loans.   

“How they’ve been approaching it is not aggressive enough,” Vitkauskas said.

She hasn’t logged into her servicer’s website yet to get a sense of her payment amount, in part because she’s too nervous. There have been periods over the past few years where Vitkauskas and her husband have relied on one paycheck. Now, as they look toward a future where in the next several years they may retire and live on a limited income, she’s not sure where they’ll get the money to repay the debt. 

“I know they’re trying, and I’m sure they’re pretty strategic behind the scenes in terms of how they decide on these policies,”  Vitkauskas said of officials. “For the layperson, for someone like me who is just hanging on a thread thinking what’s going to happen when I have to start paying this, that’s not enough to feel confident that you’re trying to fight for me.” 

‘They don’t know what it means’

So far, the Biden administration hasn’t provided a ton of detail on the contours of the new debt-cancellation plan, though officials did say they want to provide relief to “as many borrowers as possible, as fast as possible.” Officials said the process will likely take months. The Biden administration will be grounding their legal authority for the new plan in the Higher Education Act. For years, advocates have said the law gives the executive branch the ability to cancel student debt.

Related: ‘This fight is not over’: Advocates push Biden to use other tools to cancel student debt

Daniel A. Collier, an assistant professor at the University of Memphis who studies the impact of student debt on mental health, said borrowers he’s spoken with as part of his research said the Supreme Court’s decision and Biden’s announcement left them feeling angry and confused. 

“They don’t know what it means,” Collier said of Biden’s message that his administration would use its authority under the Higher Education Act. Borrowers he’s spoken with see that the president is making an effort to address student debt, but some believe he should have just wiped away a portion of borrowers’ balances and “challenged the court to say, ‘Dare me to put this money back,’” he said.

For Ponta Abadi, 31, Biden’s announcement did provide some clarity on her next steps. She’s now more certain than she was immediately after the court’s ruling that she’s not going to rush to pay off her debt in large chunks. 

In July 2020, when Donald Trump was president and before the prospect of student-debt forgiveness was on the table, Abadi was feeling comfortable with her financial situation and excited about the idea of paying off her undergraduate loans. She put roughly $9,000 toward the debt. 

But about a year later, when the Biden administration announced its debt-relief plan, Abadi learned that she could get a refund on any payments made during the pandemic pause on student-loan bills, interest and collections. By then, she’d moved across the country and money felt tighter, so she spent months going back and forth with her servicer trying to get her refund. 

She finally got the $9,000 and left it in a savings account, in case the court let the Biden administration’s debt-relief plan stand and she would be able to use the funds for everyday expenses. Now she plans to make payments toward her debt, but not pay it off aggressively. 

“The safety net is more important in my bank account,” Abadi said. 

Though Abadi is relatively certain in her decision to hold on to as much of the funds as she can for now, she’s still “really confused” about what the Biden administration’s announcement means for how she will approach her student loans, she said. 

She plans to do some calculations to figure out which repayment plan works best for her, and she’s not taking the administration up on the option to forgo making payments for 12 months without the risk of dinging your credit score. “It feels really scary not to pay a debt,” she said. 

And she remains frustrated by the government’s approach to student loans. “I’m grateful for the small changes they’ll be making,” Abadi said. “I just think there’s more they could do.”  

Louise Seamster, a professor of sociology and African-American studies at the University of Iowa whose research has been influential in pushing for debt forgiveness, said she’s hopeful the new proposal will have “teeth.” “People who wanted actual student-debt relief should keep pushing for actual student-debt cancellation,” she said.

Advocates are encouraging the Biden administration to move as quickly as possible. “Borrowers don’t deserve another year of having to wait in limbo” with their financial security on the line, said Kristin McGuire, the executive director of Young Invincibles, an organization that advocates for young people.

‘Honestly, nothing has really changed’

When he picked up the phone following the Supreme Court’s ruling knocking down student-debt relief, Kevin Noonan said, “I’ve been better.” A couple of days after Biden’s announcement had the chance to sink in, Noonan, 32, said, “Honestly, nothing has really changed.” 

“I just don’t see how this [new approach] would be any more successful,” he said. “I’m equally pessimistic that anything is going to happen with it.” 

Noonan and his wife, both teachers, have about $100,000 in federal student loans between them. His wife is trying to get her debt canceled eventually through the Public Service Loan Forgiveness program, which allows government workers and certain nonprofit employees to have their federal debt discharged after 10 years of payments. 

Noonan said he plans to try to pay off his loans instead, because he’d rather pay off his debt than wait for the forgiveness. Accessing relief under PSLF has been historically difficult.

From the archives (November 2022): Public servants to have $24 billion in student debt canceled

Noonan’s experience with college costs and student loans has led him to caution his 11th-grade students about taking on debt. Still, there are some elements of his college-finance journey that left him feeling he had little choice but to borrow. “I felt like I was pressured at 18 to go to college,” he said, and like many, he attended a school relatively close to home. To work as a teacher in New York state, he also needed a master’s degree, which required taking out student loans. 

Though Biden’s debt-forgiveness program would have only put a dent in Noonan’s household’s student-loan balance, they would have appreciated the help. “Just lowering our monthly payments, that’s money we could have spent elsewhere,” he said.  

Noonan and his wife used the pause period to pay down their private student loans, and he’s hoping that in the months before repayment they can also pay down their car. When payments resume, Noonan said, he expects they’ll cut back on small luxuries for a period, like going out to eat and traveling — though those weren’t things they did much anyway. 

There’s one financial priority they’ll keep at the top of their list, despite the return to repayment: pursuing having a baby through in vitro fertilization. “We’re very much of the ‘We’ll figure it out’ attitude,” Noonan said of balancing student-loan bills and important other costs. Still, the return to repayment “is definitely adding to our anxieties,” he said. 

Student-loan payments may mean a second job

For Christina Moreno, 39, having $20,000 knocked off her roughly $40,000 student-loan balance would have helped her stay on top of all of her bills. She’s behind on her rent after an economic rough patch when she lost her job due to the pandemic. 

Now she’s back working in operations at a charter school, but when it comes time to pay her student-loan bills again this fall, she’ll likely have to go back to working another job at night, she said. 

“The way things have been these last few years with prices and stuff, I could barely afford food for my home, so I was bummed,” Moreno said of the court’s decision. “That [loan forgiveness] really would have helped me.”   

Moreno attended a for-profit college, based in part on promises of job-placement help and the flexibility to attend school online and still take care of her kids. But despite the school’s vows, the degree didn’t lead to a job in her field. Indeed, some of the borrowers facing the biggest challenges repaying student loans are those who attended for-profit schools, which often cost more than other options and have disproportionately worse outcomes. 

“I’m in debt for nothing,” Moreno said.

Moreno thinks her experience has influenced how her twin teenage boys are thinking about their own futures. One is looking to go into a trade; the other is considering college. “They say, ‘Why should I waste my time and get into debt?’” she said. “I want them to do something, but I understand their logic because I owe so much money.” 

If the Biden administration’s debt-relief plan had gone through, the extra money would have given Moreno more room to support her kids in their post-high-school endeavors. “I would have been so much more relieved,” she said in the hours after the decision. “A little pressure taken off my back.”  

Now, Moreno and millions of borrowers across the country are waiting to see if that pressure will ultimately be alleviated. Her response to a text message indicating the Biden administration was making another attempt at debt forgiveness: “That’s great news.”  

Read next: What if you can’t pay back your student loans when payments start again? These are your options.