Some New Mexicans have expressed relief after the Biden administration last week extended the federal moratorium on student loan repayments from January to May.
For Emily Withnall in Santa Fe, it’s 90 more days to pay off other debt before she faces “surprising” monthly payments.
The New Mexico Highland University editorial assistant and single mother of two owes students over $ 80,000 in federal debt after heading to graduate school in Montana several years ago.
For occupational therapist Celestina Martinez in Albuquerque, it’s an extension of the hope that the Biden administration can write off at least part of its $ 85,000 graduate debt at the University of New Mexico.
During the election campaign, President Joe Biden pledged to write off up to $ 10,000 in federal student loan debt per person.
He has since questioned the legality of using his executive power to take the step.
Washington-based think tank Brookings Institute estimates that forgiving $ 10,000 in federal debt per borrower would cost around $ 373 billion – a bill that would be paid by a majority of taxpayers who never got themselves. a Bachelor’s degree.
Martinez said she applied for more than 40 scholarships before pursuing her undergraduate education, winning nine – enough to pay for all of her tuition at the University of New Mexico.
But graduate studies at the same school left little time to seek funding, she said.
Although she lived independently, Martinez said, having to list her parents’ financial information on the federal aid application left her ineligible for co-op or a government grant.
She therefore contracted federal loans.
Martinez’s first day as an occupational therapist was the same day the state issued pandemic stay-at-home orders in 2020.
She has since worked in the medical field and her annual salary is less than her total debt.
“I saved money that would be used for payments, but I didn’t make payments in the hope that they would be forgiven,” she said in a recent interview.
For Trey Pereyra, human resources specialist and union co-chair of school staff at Los Alamos public schools, extending the moratorium is not enough.
He won’t be graduating from Legal Studies until 2023 and is already thinking about how he will pay off the debt of more than $ 20,000 he has accumulated at the private school Grand Canyon University in Phoenix.
“I just can’t afford to be picky,” he said in a recent interview, regarding his addiction to student loans. “In education, we don’t make a lot of money.
For Whitney Holland, president of the American Federation of Teachers of New Mexico, the freeze was a chance for her and her husband to divert their $ 700 monthly group loan payments into impending medical debt.
“It helped us progress in ways that we couldn’t before,” she said.
The moratorium extension scuttled the January 31 end of the federal loan payment freeze, which began under the Trump administration in March 2020 to ease financial burdens amid the pandemic.
This means that the roughly 225,000 New Mexicans with a collective federal debt of $ 7.7 billion have not had to make their monthly payments, unless they choose to pay off their debts to avoid High interest does not accumulate at the end of the freeze.
Forbes estimates that the moratorium, which also freezes interest rates on loans made through the US Department of Education, had wiped out $ 90 billion in interest on federal loans in the United States.
New Mexicans who attended or graduated from college have an average of $ 33,000 in student loan debt per person, said Department of Higher Education secretary Stephanie Rodriguez.
“It’s pretty low compared to the rest of the country, but it’s still a lot of debt for one person,” she said.
And many New Mexicans might not be able to pay; The state has the second-highest loan default rate in the country, according to a 2019 analysis by the Student Borrower Protection Center.
Earlier this year, Withnall, 40, detailed her experience with non-payment of undergraduate student loans accrued while studying English at New Mexico Highlands University in an article for Business Insider. She is a writing fellow for the low-income advocacy organization Common Change.
Withnall said she left an abusive marriage and was getting paid legal fees when her ex brought her to justice.
Her eldest, 18, is considering university but hesitates.
“They don’t want to be in the situation I was in, and I don’t blame them,” she said.
Withnall has taken out loans from the federal government, but AFT New Mexico organizer John Dyrcz believes the high default rate may be due in part to New Mexico having so few restrictions on loans. loans issued by the private sector, which he said students could opt for if they are not eligible for federal aid.
People with private study debts have not benefited from a break in their payments.
The union has approached Governor Michelle Lujan Grisham about a possible bill for the next session that would establish a Bill of Rights for Student Loans.
Such a document would prevent “deceptive” practices and free up funds for an ombud to advocate for students to navigate loans largely from outside lenders.
A similar bill sponsored by Senator Katy Duhigg and Representative Patricia Roybal Caballero, both D-Albuquerque, died on the Judiciary Committee last year.
Duhigg, a former consumer protection lawyer, said she would sponsor similar legislation if it was back on the table in 2022.
She said the bill probably failed because it was too big.
“In New Mexico you have more protection taking out a predatory loan than a student loan, which is crazy,” she said.
Both Dyrcz and Holland are hoping that increased attention to the debt issues sparked by the moratorium might make this a good time to reintroduce the bill.
“It’s a perfect storm of opportunity for New Mexico,” Dyrcz said.
“The state can no longer ignore this problem. “
The secretary of the Education Department said she also wanted to nip the problem in the bud by emphasizing “free college” statewide.
In September, the Department of Higher Education announced budget priorities for the 2022 legislative session, including an additional request for $ 48 million to expand the New Mexico scholarship.
Approval of the application would double funding for the initiative, which covers tuition fees after state financial aid has applied for two-year college programs.
In an interview this month, Rodriguez also highlighted the importance of publicly funded loan repayment programs. The ministry’s request in 2023 includes an additional $ 3 million for a teacher debt relief program that pays up to $ 6,000 in unpaid federal debt over two years for teachers who attended school in New Brunswick. Mexico.
The average student debt of the more than 600 program participants this year is $ 48,000, according to the ministry.