Education Matters

According to the DOL, higher education leads to greater earnings and reduces unemployment. Those who forgo a college education are five times as likely than people with college degrees to be in poverty and to lack health insurance. But while the financial benefit of college is clear, the overall financial health of college graduates is more nuanced.

There are many contributing factors to whether or not higher education results in an equitable financial return, including college major, chosen institution and, most significantly, student loan debt. Decades of aggressive borrowing teamed with soaring educational costs has resulted in a student loan crisis; as of first quarter 2023, Americans owed $1.78 trillion in federal and private student loan debt.

 For many New Yorkers, a college degree is obtainable without the necessity for debt; NY households earning less than $125K Adjusted Gross Income (AGI) qualify for the Excelsior Scholarship, which allows students to earn a free college degree at any City University of New York (CUNY) or State University of New York (SUNY).

But what about those who have already acquired student loan debt? Although the Supreme Court blocked a student loan forgiveness program that would have dissolved up to $20K in debt per borrower, there are tactics debtors can employ to take hold of their financial future.

The simplest technique is to budget and make additional student loan payments, making sure to verify all additional payments go toward the principal as opposed to future installments.

There are also four income-driven repayment plans: Income-Based Repayment Plan; Income-Contingent Repayment Plan; Pay As You Earn Repayment Plan; Revised Pay As You Earn Repayment Plan. All four of these programs limit payments to less than 10%-20% of one’s discretionary income, based on the family size and the type of plan. In addition, after a repayment period of 20 or 25 years, the remaining debt balance may be discharged.

Additionally, some may qualify for student loan forgiveness through one of the five debt forgiveness programs: Public Service Loan Forgiveness, for public servants, including government and nonprofit workers who make 10 years of repayment through the PSLF program; Teacher Loan Forgiveness, for educators who work full time for five consecutive academic years at a low-income school; Total and Permanent Disability Discharge, for borrowers who are permanently disabled that the DoED automatically identifies eligible using existing data from the Social Security Administration; and Closed School Discharge, for those attending an institution that closed while enrolled or shortly thereafter leaving; and the Borrower Defense to Repayment Plan, for those whose school engaged in misconduct while enrolled.

Regardless of one’s academic or financial standing, self-education leads to critical thinking skills, self-advocacy and self-sufficiency. As the saying goes, “Formal education will make you a living; self-education will make you a fortune.” When pursuing higher education or tackling student loan debt, it is important to research all available options to adequately assess the next best steps for one’s future.

Originally published in EG Gazette 2023 Summer Edition.