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A young man sitting in thought is collaged with images of a university campus, students at a graduation ceremony, and a cloud of dollar signs.
(Collage by Alborz Kamalizad / LAist, photography courtesy of CSUF, UCLA and Unsplash)
Wait, How Did Student Debt Even Become A Thing?
The debate around student loan repayment in the United States often focuses on individual responsibility, but student loan debt didn't grow to $1.75 trillion without federal and state policy.
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If you went to a public high school in California, there’s a chance you came across some version of this graphic, either on classroom walls or in a textbook: Two simple bar graphs. The one on the left represents the earnings of a high school graduate. The one on the right, which is markedly higher, represents a person with a college degree.

4:53
Wait, How Did Student Debt Even Become A Thing?

The graphic is meant to motivate students to pursue higher education. And to drive home the point, the accompanying text often reads: “Over a lifetime, college graduates earn about 1 million dollars more than people with high school diplomas.”

For students from working class families, college is framed as a way to avoid backbreaking labor, a chance to work a job you don’t hate, a ticket to the middle class.

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Paying for this ticket often requires student loans. Across the U.S., 45 million people owe a combined $1.75 trillion. California, where leaders once envisioned free higher education, accounts for $141.8 billion of that amount.

The COVID-19 pandemic prompted the federal government to put a pause on some student loan payments. That pause has been renewed repeatedly; it’s next slated to expire on August 31.

LAist interviewed dozens of student loan borrowers with roots in L.A. County. Some of them are students still making their way through college. Others are teachers, professors, counselors, social workers, journalists, urban planners, public defense attorneys, legislative aides and doctors working in the public sector. They paid their way through college with a combination of grants, scholarships and loans, all while working at least part-time. Many are the first in their families to earn a college degree and, in some cases, the first to study past grade school.

We asked these borrowers why they took out student loans and, if they’re still in debt, how they plan to meet their repayment obligations amid record inflation and the rising cost of living. They and student debt scholars also examined a bigger question: If the aim of higher education is to create a pathway to economic mobility and a more equitable society, does it make sense to fund it through individual debt?

The Calculus: What Compels Students To Take On Debt?

David Madina has been teaching English at a public school in Pico Rivera for 20 years. He grew up in Monterey Park, where he was raised by a single mother. She recently retired, after years of selling shoes at a Macy’s in Montebello.

To save money, Madina attended Pasadena City College for two years. When it came time to transfer to a four-year university, he considered UCLA and Whittier College.

He opted for the latter, a private liberal arts school, in part because it had smaller class sizes. More importantly, Whittier College was closer to home. Madina was a new dad, and he wanted to be close to his young son.

My generation was told that that was the plan: You go to college because your parents didn't get to go.
— David Madina, English teacher
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Whittier College also gave him a better financial aid package, although he still had to take out loans. Madina didn’t think twice.

“My generation was told that that was the plan: You go to college because your parents didn't get to go,” he said. “I just figured you take out loans for cars, houses and school, and that's what you do, that’s how you get through it.”

Madina still remembers the stress of filling out the Free Application for Federal Student Aid, known as FAFSA. He completed it with his mother sitting beside him. Halfway through the process, she buried her face in her hands and wept. Aside from supplying her tax return, she didn’t know how to help.

After years of making payments, Madina still owes the federal government $90,000.

He’s hoping to have his debt wiped out through the Public Service Loan Forgiveness program, which cancels the remaining balance on some loans after borrowers make 120 monthly payments. But navigating the process can be challenging. Recently, he spent more than four hours waiting to get someone at the agency on the phone.

Madina is well aware of arguments against student loan cancellation.

“People don't know why I went to Whittier,” he said. “They’ll say: ‘Hey! No one told you to sign.’ But I was a kid working two jobs. That was my only way out.”

Amid of a sea of graduates, three family members scream in support of their own. One of the holds a camera in one hand and uses her other hand to project her voice.
For many first-generation college graduates, higher education represents an opportunity to better care for their families.
(Courtesy of Cal State Fullerton )

When, Why And How Did U.S. Student Debt Balloon?

Of the $1.75 trillion owed in federal and private student loans in the U.S., federal loans make up the vast majority: $1.62 trillion.

That debt is also the result of a major swing in public policy.

After World War II, the federal government emphasized better access to higher education. Congress had passed the G.I. Bill in 1944, and in 1947, the Truman Commission on Higher Education proposed expanding free education through the first two years of college.

At the height of the civil rights movement, Congress passed the Higher Education Act of 1965, meant to increase access for high schools graduates who “would be unable to obtain such benefits without aid.”

Under Title IV of the act, the government created several core student aid programs, subsidized and unsubsidized federal student loans, along with campus-based aid programs like work study, which provide part-time jobs to help undergraduate and graduate students pay for expenses. In 1972, Congress expanded Title IV by establishing the need-based grants for undergraduates, now known as Federal Pell Grants.

The cost of higher education, however, has climbed over time, both at public and private institutions. According to the Education Data Initiative, average tuition and fees have increased 130% since 1990 after adjusting for inflation.

Funding for higher education aid was greatly reduced as part of the Reagan administration’s broad cuts to social spending programs. Grant funding and other federal support has also not kept pace with the rising cost of tuition and educational expenses. The maximum Pell Grant, for instance, covered approximately three-quarters of in-state public tuition at its peak in the 1970s. By 1988, it covered less than half. Today, maxing out at $6,895, it covers less than one-third.

In 1992, policymakers lifted the cap on Parent PLUS loans, allowing parents to borrow up to the full cost of attendance on behalf of their children. These loans are not subsidized, so interest on them begins to accrue from the moment they’re disbursed. They also often have higher interest rates and less favorable repayment terms than those for students, making it even harder for these borrowers to get out of debt.

And then came the Great Recession: Between 2009 and 2019, student debt ballooned from about $772 billion to $1.6 trillion.

During his 2020 campaign, President Joe Biden pledged to cancel at least $10,000 of students' individual loan debt, but critics say this would amount to doling out handouts to highly educated elites.

California’s Contribution To Increasing Student Debt

Other factors have affected student borrowing: states have scaled back on funding for public universities and wages have stagnated. Today, even students who work full-time often rely on loans to pay for tuition and their basic needs, like housing, food and transportation.

Since the Great Recession, graduate school students have taken on an increasing portion of total new loans. In 2006, they made up about one-third of loans taken out that year. Today, about 50% of total student debt is owed by households with a graduate degree.

Stephanie Pérez, for instance, earned a bachelor’s degree at New York University, then a master’s at Cal State L.A. She won scholarships for her undergraduate studies, but still had to take out loans. For graduate school, she worked and paid out-of-pocket. She didn’t want to pile on any more debt.

“It's interesting that people think elites are the ones who are taking out student loans,” she said. “When I was paying cash for my master's, I was also living in my mom's living room in order to be able to save money, so that I wasn't houseless.”

Conversations around student loan debt cancellation should be put in this context of rising college costs and waning federal support, said Louise Seamster, a sociologist at the University of Iowa who’s researched this type of debt.

When students are evaluating whether to take out loans, she added, “they're making that choice in the circumstances of today, which means that they have to buy into an educational system that is paid for a certain way. And increasingly, that’s on the backs of students.”

But that hasn’t been the case throughout history, she said. “California, in particular, was famous for its public university system, which was virtually free. And that was dismantled.”

When Ronald Reagan became governor of California in the late 1960s, he called for two things: One was the removal of Clark Kerr, the president of the University of California and a champion of free tuition. The second was the imposition of tuition on UC students.

Shortly after Kerr was ousted, the Regents of the University of California agreed to impose fees on students, arguing that it was not the same as charging tuition. With time, those fees continued to rise.

In 1970, State Sen. Albert Rodda, a Democrat from Sacramento, argued that the fees were obviously tuition, and that they could have an especially adverse effect on low-income students and limit access to doctoral programs and professional schools.

Today, more than four million Californians have student debt, with an average balance of $37,700.

How Student Debt Grows Racial and Gender Wealth Gaps

College campuses today are more diverse than ever. Since the Higher Education Act was passed, women and people of color have made strides in representation. Once rarities, women are now the majority of freshmen. They also hold two-thirds of student debt.

Plus, when it comes to the promised “$1 million more over a lifetime” for college graduates, it’s actually men with bachelor's degrees who earn about $900,000 more in median lifetime earnings than high school graduates, according to the Social Security Administration. Women with bachelor's degrees earn $630,000 more. And the discrepancy persists even with more education. Men with graduate degrees earn $1.5 million over a lifetime than high school graduates, compared with $1.1 million for women.

The University of Iowa's Seamster noted that the shift to relying on loans to pay for higher education has occurred as institutions admit more women and people of color.

“These institutions formerly — either legally or informally – barred or limited women, Black students, Latinx students and Asian students from entering. And now that we're seeing higher enrollment of students who are not white men, the price tag has gone up significantly,” she said.

Seamster contends that, far from being “The Great Equalizer,” higher education that’s funded through individual debt exacerbates wealth gaps.

She and her colleague, Raphaël Charron-Chénier, a sociologist at Arizona State University who studies racial inequality in the context of consumer markets, examined trends in household debt.

Together, they found that — unlike credit card, housing and car debt — the average household education debt continued to expand after the last financial crisis. They also found that educational debt was similar across racial groups until 2007, then intensified more rapidly for Black households than white households.

In a recent webinar hosted by the National Consumer Law Center and Center for Responsible Lending, Victoria Jackson, assistant director of higher education policy at Ed Trust, signaled that the return on college education is lower for Black and Latino graduates, who earn less than white and Asian graduates with bachelor’s degrees. Among all groups, Latinas earn the least.

Seamster and Charron-Chénier likewise indicated that returns on higher education are lower for Black Americans. Compared with white students, Black students have lower completion rates, and, even among college graduates, they experience higher unemployment — all of which impacts their ability to pay off their debt.

A recent report from the Center for Law and Social Policy and the National Consumer Law Center found that Black students at every income level are disproportionately more likely to rely on loans to cover the cost of a college education. And even after 12 years of repayment, the typical Black borrower owes more than the principal borrowed.

So student loans may allow more historically excluded students to pursue a college education, but they can expect different returns. Plus, because these students tend to take longer to repay their loans, they accrue more interest. In other words, those who have most to gain from a college degree often end up paying more for it.

The College Sell

Many students aren't sure whether the benefits of higher education justify the cost. But even those who are sold on its benefits sometimes hesitate to take that next step.

Nolan Luevano was born and raised in East L.A. Growing up, he maintained a steady GPA at Schurr High School in Montebello, but he wasn’t sure what he’d do after graduation.

No one in his family had a degree, but many of his peers were working their way to universities, and he didn’t want to be left out. When he was a senior, he walked up to his school’s college center and asked the counselor to help him get on track.

The office, he recalls, had pennants hanging from the ceiling and rows of cubbies teeming with applications and leaflets. Wide-eyed, he watched students walk in, grab what they needed and go.

“‘I want to go to college. How do I do that?’” Luevano asked.

The counselor responded using terms he didn’t understand. “So I told her: ‘If that's step one, you need to start at step zero, because I know nothing,” he said.

Luevano went on to enroll at Cal State Dominguez Hills, where he majored in earth science. He worked throughout college and paid up front for as much as he could. Still, by the time Luevano was a sophomore, he began taking out loans. When he graduated, he owed $15,000.

Today, Luevano is a sixth grade math and science teacher at Montebello Intermediate School.

Before the pause, he was making regular payments and managed to pay off about half of his student debt. He’d like to go back to school to earn a master’s degree in engineering, but the cost has held him back.

“It's not: Am I capable of it? It's not: Am I smart enough? It's not: Can I get accepted anywhere? It's literally: Can I afford it?” he said.

A family of four poses for a photo, including a young man in a cap and gown. They are outdoors, posing before a school seal.
Ernesto Villaseñor, who hails from Compton, poses for a graduation photo with his family. He is now a law student.
(Courtesy of Ernesto Villaseñor)

Ernesto Villaseñor had a similar experience. He grew up in Compton, the son of migrants from the Mexican state of Michoacán. A star student in high school, he went on to Rensselaer Polytechnic Institute — his dream school— in upstate New York. Because he earned The Gates Scholarship, he graduated with $16,000 in student loan debt — this for a school where tuition alone costs more than $55,000 per year. His student loans were subsidized, he added, so they didn’t accrue interest until he graduated. All in all, Villaseñor felt “it was a pretty good deal.”

After he graduated, Villaseñor signed up for an income-based repayment plan, which he appreciated because it helped him stay afloat.

“I was paying a little bit above the minimum amount,” he said, always on time. But at the end of the year, he’d look at the remaining balance and feel deflated.

“What's the point of making these payments if they're not really making much of a difference?” he said.

Villaseñor longed to go to law school, but he feared taking on more debt. At first, he thought he could keep working and save. Then he decided to take the plunge.

“I worked in nonprofit, so it's not like I was going to be making a gazillion dollars every year,” he said. At most, his savings would’ve enabled him to cut down on some expenses. “I was just kind of, like: Let's be honest, unless I win the lotto, I'm not going to be able to pay this.”

Villaseñor is about to begin his third year at the University of Baltimore School of Law, and he’s more than $150,000 in debt. He plans to go into public interest law. His hope is that the Public Service Loan Forgiveness program will provide some relief.

Who Profits From Student Debt?

Proponents of the existing system maintain that loans enable students to acquire an education they otherwise couldn't afford. Opponents, on the other hand, say the seemingly benevolent loans saddle students with debt and turn them into profit centers.

Lauren Hardin, who graduated from Torrance High School in 2009, paid for her undergraduate career with grants, scholarships and loans. She was the first in her family to go to college. For her, completing the FAFSA was nerve-racking. “Getting financial aid was my only viable way of going to school,” she said. “I didn't want to mess it up.”

Hardin earned a bachelor’s degree at Loyola Marymount University. Even though it’s a private school, it cost her less than a public institution because of a generous financial aid package, she said. Hardin then went on to earn a dual master’s degree through a program with USC and the London School of Economics. This time around, grants and scholarships were not available, so she financed her education with federal student loans.

I don't think the student loan program should be designed so that it's making profits for the federal government.
— Elizabeth Warren, U.S. Senator (D-Mass.)

Hardin graduated in 2015. During the pause, she saved up and paid off a loan with a particularly high interest rate. But, among her remaining loans, a $20,000 debt has ballooned to $23,000 — “even though I've been making payments on time for several years,” she said.

The federal government holds more than 90% of student debt. As Reveal pointed out in 2016, this effectively makes it one of the world’s largest banks. Federal loans issued between 2007 and 2012 were projected to generate $66 billion in income. And by the U.S. Department of Education’s own calculations, the government earned as much as 20% on each loan in some years. The federal government’s own data also indicates that millions of people have been grappling with student loan debt for years, many of them for decades.

At a U.S. Senate hearing in 2014, Sen. Elizabeth Warren quizzed the former head of the Federal Student Aid office, James Runcie, about the cost of operating the federal student loan program.

A Government Accountability Report calculated that “the interest rate necessary to cover the costs of the program without making a profit for the upcoming student loans would be about two and a half percent,” said Warren. “But instead, we'll be charging students nearly twice that amount for undergraduate loans, and about two-and-a-half to three times that amount for graduate loans and for PLUS loans.”

“When we set interest rates higher than we need to to cover the costs, that generates revenue for the government,” she added. “Where do those profits go? Do they get refunded back to the students who paid more than was necessary for the cost of their loans? Or are they just used to fund the government generally?”

Runcie, an Obama appointee who quit in 2017, confirmed that the funds go back to the government and not to the student loan program.

“It seems to me we're just taxing students for the privilege of borrowing money to try to get an education,” Warren said. “I think that's obscene. I don't think the student loan program should be designed so that it's making profits for the federal government.”

Capitalizing On Interest

Another way in which the federal government profits from student loan debt is through interest capitalization, which describes the practice of tacking on unpaid interest on a loan to the original balance.

Students are eligible for deferment when they enroll at least half-time. Often, their loans are automatically deferred based on enrollment information reported by their schools.

But “most people don't realize that when you have an unsubsidized federal student loan that’s in forbearance or deferment, the interest continues to accrue during those periods,” said Jay Fleischman, a consumer protection attorney who represents student loan borrowers. When students resume making payments, they “get charged interest on top of interest.”

I think that the system as it is currently set up is designed — designed — for people who owe student loans to never be able to pay them off.
— Jay Fleischman, consumer protection attorney

Fleischman also noted that when a federal student loan defaults, collection costs get tacked on top of that loan, and they can come up to approximately 25% of the principal and interest balance.

“If you owed $100,000 when you went into default and then you rehabilitate or consolidate, now you owe $125,000 dollars,” he said. “And the amount of interest that's going to accrue on that new principal balance is significantly higher over the life of the loan.”

Fleischman added: “I think that the system as it is currently set up is designed — designed — for people who owe student loans to never be able to pay them off, unless they're at the higher end of the earning spectrum."

LAist asked the Department of Education how much of the outstanding student loan balance is interest. The department said that of the $1.6 trillion in student debt, $116 billion is interest (about 14%), which includes interest that has been capitalized into the principal amount.

But the U.S. government isn’t the only entity that profits from student debt.

The pandemic-induced pause has suspended monthly payments for more than two years. With no repayment obligation and zero-percent interest, borrowers are less likely to consider shifting their federal debt into private loans. In response, student debt refinance companies have been clamoring for payments to resume. As Politico reported in March 2022, SoFi, one of the largest student loan refinance companies, told investors that the Biden administration’s last extension of the payment freeze was expected to reduce the company’s profits by up to $25 million in the first quarter of the year. The company is one of several that have urged the Biden administration to put an end to the pause, or at least limit it to certain borrowers, like those who are unemployed.

Navient, one of the nation’s largest student loan servicers, recently settled a lawsuit with attorneys general from 39 states, agreeing to pay over $1.85 billion to student loan borrowers. The lawsuit alleged that, since 2009, Navient targeted struggling borrowers and wrongfully steered them into costly forbearance, instead of advising them on income-driven repayment plans. As a result, many eligible borrowers missed out on $0 payments, which would have counted toward loan forgiveness.

What Happens To Borrowers Who Fail To Make Payments?

Much like those who are grappling with credit card debt, student loan borrowers who fail to make timely payments face wage garnishment; seizure of tax refunds and Social Security benefits; default records on their credit history; and collection calls.

In a 1976 reauthorization of the Higher Education Act, Congress started to limit bankruptcy as an option for student loans. Once Congress passed the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005, virtually no student loan — federal or private — could be discharged, except in the rarest of cases. To do so, borrowers must prove undue hardship, which involves filing a lawsuit against their lenders, who often have significantly more resources. Student loan borrowers who enter default also become ineligible for further student aid. Plus, unlike homeowners, students cannot foreclose on their degrees and have their debts wiped clean.

Families carrying student debt are less likely to lose their lifetime savings overnight, unlike what happened during the foreclosure crisis. Still, when households are saddled with student debt, it can be hard to obtain loans for other investments, like buying a home.

Taken together, Seamster and Charron-Chénier describe the student loan system as “predatory inclusion.”

The loans, said Seamster, grant “marginalized people access to what’s usually an economic good, but the terms undermine the benefit.”

Chris Valencia grew up in the South Bay. As a child, he struggled with dyslexia, a learning disability that made it hard for him to read.

Neither of his parents has a college degree, but they encouraged him to do well in school and made time to sit down with him for extra reading practice. By the time Valencia got to San Pedro High School, he was among the strongest readers in his class. His parents also made sure he got the classes he needed to go to college.

“They wanted me to do better,” he said. “They wanted me to be able to get a good job. They wanted me to be stable.”

Valencia graduated in 2007 and started his higher education journey at El Camino College in Torrance. His classes were often impacted because of the financial crisis. As a result, it took Valencia three years to transfer to UC Davis, where he majored in political science.

The Blue and Gold Opportunity Plan — which provides grants and scholarships for undergraduates whose families earn less than $80,000 — covered most of his expenses.

“I got away with having just over $10,000 in debt,” said Valencia. “But I've been paying since I graduated and just got it down to $7,000. And I graduated about a decade ago.”

Valencia now works as a legislative aide in Sacramento, but he struggled to find gainful employment after graduating. To break into the field, he worked a number of unpaid internships, including at the California State Assembly and the governor's office. At one point, he missed a payment and started getting calls from student loan service providers.

“My first payments were over $100. And when you're making barely anything and paying $600 in rent, that's a lot of money,” he said.

Later, Valencia secured a full-time job in the mailroom at the governor's office. It paid about $32,000 per year. For him, it was a godsend.

“That was the first time I had a steady monthly income, not part-time or gig work or contracts here and there,” he said. “And it was such a stress relief. I didn't have enough to go on vacation. I didn't have enough to go out and party. But I had enough money to pay my rent and buy groceries. I felt a big weight come off of me.”

During the student loan pause, borrowers have had the option of making payments and taking advantage of the unprecedented 0% interest. Most of the borrowers interviewed by LAist did not take this route. Instead, they used the money to get desperately needed dental work, replace decade-old cars or, for the first time in their lives, save money.

Valencia used the money to pay off a credit card he took out to get through college. He’s also helped his parents pay their rent. On occasion, he goes out for dinner or a movie.

“I don't know if that sounds really selfish, but, like, what is the point of doing all this work if you can't enjoy your life a little?” he said. “I don't think God put me on this earth to work and then die.”

What Are The Proposed Solutions?

Student loan debt proponents point out that borrowers have the option of signing up for income-driven repayment plans. If their income is low enough, borrowers can pay as little as $0 per month. These plans also promise loan cancellation after 20-25 years of making payments.

But the promises rarely pan out. A recent NPR investigation found that, among 4.4 million borrowers who’d been repaying for at least 20 years, only 32 had their loans canceled.

Californians are actually among borrowers with the least student debt. This, in part, is due to the state’s Cal Grants, which are awarded to low-income students and pay full tuition at UC and CSU campuses. In fact, more than half of UC in-state undergraduates don’t pay tuition.

At the federal level, the Biden administration has responded to the student debt crisis by repeatedly extending the payment freeze launched under former President Trump.

To date, the president has implemented loan cancellation for certain borrowers, including students defrauded by for-profit colleges and borrowers with total and permanent disabilities.

But what of Biden’s pledge to “immediately cancel a minimum of $10,000 of student debt per person”?

In April 2021, President Biden instructed the Department of Education to draft a memo exploring his authority to cancel student debt through executive action. In May 2022, the Washington Post reported that White House officials were exploring the promised cancellation of $10,000 in student debt per borrower, but limiting efforts to people who earned less than $150,000 last year.

Opponents to this proposal can be found across the political spectrum.

A large family, with children and adults, pose for a picture on a sidewalk. A young woman, clad in a black cap and gown, is at the center, smiling and holding a bouquet. Her family members are holding photos of her
Stephanie López Ruvalcaba and her family pose for a photo at the University of La Verne. She managed to pay off her student loans within 10 years. Even so, she supports debt cancellation.
(Courtesy of Stephanie López Ruvalcaba)

Jonathan Pacheco Bell, an urban planner and adjunct professor at Cal Poly Pomona and Pitzer College, said he appreciates that Biden has not forgotten his campaign promise, but $10,000 is insufficient.

“It's a way to split the difference so that you make some people happy and some people mad, but you're not going to piss off the other side of the aisle, because you didn't wipe away all the debt. It’s a very comfortable and extremely safe position,” he said.

Some of his students have taken on tens of thousands of dollars in debt, he added. “Meanwhile, the U.S. seems to be endlessly funding wars and other priorities with almost no hesitation, but it hesitates to invest in its own workforce.”

Others oppose limiting student loan relief by income, arguing that it’s not sensible because efforts to exclude a few borrowers with high incomes would transform the relief program into a bureaucratic nightmare that would ultimately keep relief out of the hands of those who need it most.

Finally, some who oppose canceling $10,000 per borrower argue that doing so would be unfair to those who’ve paid off their loans.

But many debt-free or debt-light borrowers don’t feel that way.

Sofía Guadrón is a first-generation college student, raised by a single mother in the Westlake/MacArthur Park area of Los Angeles. She graduated from UC Davis in 2018, with a degree in Human Development and Family Studies and French. She’s been making payments for years, including during the pause. Her debt is down to $2,000.

Widespread cancellation wouldn’t bother her in the least, she said. Taking stock of the pandemic’s disproportionate impact on working class people and communities of color, she added: “I would have thought that after being stuck in isolation for two years, we would want to show each other some form of care.”

Stephanie López Ruvalcaba, another first-generation college student who hails from Lincoln Heights, agrees.

4:51
Stephanie López Ruvalcaba On Working To Pay Off Loans

She majored in communications at the University of La Verne and worked hard to graduate without accumulating too much debt. She did well in high school and received grants and scholarships for college, but they didn’t cover all the costs.

Her parents helped her during her first year, and her dad worked three jobs. Then, during her sophomore year, her dad’s hours were cut. So López Ruvalcaba worked three jobs. She raced between a work-study job on campus, tutoring at an elementary school and waiting tables on the weekends — all on top of a full course load.

One day, while working on an assignment, she found herself struggling to breathe. Then she couldn’t stop crying. The panic attack landed her in the hospital.

After that, López Ruvalcaba knew she had to work less to stay healthy, but she still sought ways to cut costs. During her third year, she worked as a resident advisor, which got her free room and board. Then, as a senior, she commuted — at least 45 minutes each way — to forgo the expense of on-campus housing. Even so, she graduated with about $23,000 in student debt.

After graduating, López Ruvalcaba struggled to find employment in her field. But she’d found work at another restaurant, and she was making “great money on tips.”

She focused all her energy on paying off her student debt, starting with minimum payments. A year after graduating, she got a job at a media company.

“As I planned my finances, anything I had leftover at the end of the month, I would just put it into my loans,” she said.

López Ruvalcaba managed to pay off her debt in 2020, less than 10 years after graduating.

After working so hard to pay off her loans, how would she feel if the Biden administration canceled $10,000 per borrower?

“I would definitely not be upset,” she said. “Whatever obstacles we went through, we shouldn't wish the same for others.” Her younger brother will soon go to college, she added, and she doesn’t want him to experience what she did.

Pedro Lemus just completed his first year as a sixth grade English and history teacher at Carver Middle School in South L.A. And though he’s been working since he was 17, this is his first time having employer-based health insurance.

The son of immigrants from El Salvador and Mexico, he earned his bachelor’s degree and teaching credential at Cal State L.A. Throughout his time in school, he worked and got scholarships. Still, he graduated with about $24,000 in student debt.

A family of four poses for a photo in front of a large bush, including a young man clad in a cap and gown and colorful graduation stole. The words "CAL STATE LA" loom above them.
Pedro Lemus is one of 45 million people with student loan debt. He's a first-generation college graduate and a sixth grade teacher in South L.A.
(Courtesy of Pedro Lemus)

Lemus has mixed feelings about his student loans. He doesn’t like being in debt, but it’s because he took it on that he’s been able to secure a career he enjoys and build a home with his partner, he said.

He notes that his father didn’t get to study past second grade. In contrast, he, his brother and the seven cousins they grew up with in Cypress Park all earned undergraduate degrees. And that’s something he’s proud of.

“My kids, my cousin's kids, they're going to grow up knowing that all of their parents and uncles and aunts are college educated,” said Lemus. “We have that now ... We're kind of the stepping stone in our generation to providing that pathway forward for our families.”

To make that happen, all but two took on student debt.

Canceling $10,000 in debt for everyone with federal student loans would settle the balances of roughly one-third of borrowers, the University of Iowa's Seamster noted.

“But $10,000 does not really make a large dent in median Black student debt, which has reached $30,000,” she said. Her research recommends eliminating educational debt at levels of $40,000 or more, but she underscores that debt cancellation alone would leave in place the systems that trapped people in the first place.

How Does Ending One Crisis Prevent Another?

There’s a thorny question: If a lot of debt is forgiven, what’s to prevent this crisis from happening all over again? What can, or has, changed?

Those in favor of funding higher education through student debt sometimes argue that the crisis can be solved through improved financial literacy. For those exploring options for borrowing, the Consumer Financial Protection Bureau offers advice and a financial planning tool. For those already with loans, the U.S. Department of Education has created a simulator tool, which helps borrowers calculate loan payments, choose from repayment options and gauge whether they ought to consolidate their loans.

Campuses may also require students to take an online exit course to prepare for repayment. Brianna García, a consumer affairs major at Cal State Long Beach, is set to graduate this fall. She recently completed the exit course, an experience she found overwhelming.

García is a Warren High School graduate who grew up in East L.A. and Downey. To pay for college, she took out five unsubsidized loans. She works as a receptionist and hopes her degree will help her earn more than what she’s making now. “But it’s really scary,” she said, “because it’s not always for sure.”

Instead of canceling $10,000 in student debt, some have suggested that eliminating interest on student loans would be more beneficial because it would benefit current and future borrowers.

To enable students like those in the Lemus family to thrive and build intergenerational wealth, the Center for Law and Social Policy and the National Consumer Law Center recommend a multi-pronged approach to the student debt crisis. This includes extending the student loan payment pause; improving existing repayment options; and investing in college affordability by strengthening things like the Pell Grant program and providing free community college.

In July, the U.S. Department of Education shared new proposed rules for the student loan system. These include allowing more people with total or permanent disabilities to qualify for discharge, along with making it easier for those in public service to make progress toward loan cancellation. The department also wants to scale back on interest capitalization. And last fall, the department announced temporary changes to its Public Service Loan Forgiveness program, which make more types of loans eligible for cancellation.

At the state level, the UC’s Board of Regents is also working toward making undergraduate education debt-free by 2030. In May, it voted to prioritize part-time work over taking out loans as part of the system’s official financial aid policy. And starting this fall, tuition will be adjusted for each incoming undergraduate class but remain flat until students graduate. For graduate students, tuition will be set annually but rise no faster than inflation.

These moves, however, will not provide increased support for students seeking advanced degrees for whom even subsidized loans are not available. This leaves students without access to intergenerational wealth with little choice but to assume debt.

A More Secure Future

Martiza Cha is a doctoral candidate at Claremont Graduate University. She’s also a counselor at a high school in L.A. County.

She likes to get her students thinking about college — and how to pay for it — as early as possible, starting with presentations for incoming freshmen. She also wants them to explore all their options.

Looking back on her experience at Garfield High School, Cha recalls that, because she had a high GPA, she was discouraged from applying to CSUs and community colleges.

Her overworked counselor had the best intentions, Cha said. But now that she’s charged with helping young people navigate huge decisions, she asks her students questions to get them to think beyond school rankings: What do you want out of your college experience? Does that campus offer the major you’re interested in? Do companies partner with that university to provide internships? Are you OK with being in a huge lecture hall, or would you prefer more individualized attention?

Cha earned a bachelor’s degree, a master’s and a teaching credential at UCLA, and a second master’s and counseling credential at Cal State Dominguez Hills. Having navigated the student loan system herself, she’s also able to provide students with guidance on budgeting.

A family of three pose beside a brick building, including a young woman clad in a black cap and gown, along with a blue stole that reads "Class of 2005."
Maritza Cha began her higher education journey at UCLA. She is now a high school counselor and a doctoral candidate at Claremont Graduate University.
(Courtesy of Maritza Cha)

“I always tell my kids, if I were redoing my undergrad, I would take out loans my first year, then see if I could save that,” she said. “You don't know how your parents will be able to support you, and that transition is a little tricky.”

Cha owes the U.S. government $143,927 for her education. But she does not regret taking out student loans. Her education meant having a stable job during the pandemic. It also meant earning enough money so that her mother — an immigrant from Guatemala who didn’t get to go to middle school – could stay home and not put her life at risk.

Cha said she’d appreciate $10,000 in student debt cancellation, “but I wish it was more, to be honest.” Students like her “start off owing,” she added, “so it's hard to build your generational wealth.”

“The voices saying that student debt is for elites, or that [canceling student debt] would somehow raise inflation, or that it would cost too much are not really engaging with the facts on the ground about who borrowers are, why their debt is so high, and what our actual student debt system looks like,” said Seamster. “They're more just hanging on to the system as it's been and kind of hoping that we don't look under the hood.”

What questions do you have about higher education?

Corrected August 9, 2022 at 10:20 AM PDT
A previous version of this article misidentified one sponsor of a webinar. The correct sponsors are the National Consumer Law Center and Center for Responsible Lending.