Lorin Cumberbatch is poised to expand her skincare business in Greater Lansing and she can envision the next stage of growth if federal relief comes to millions of Americans with student loan debt.
Cumberbatch expects the Biden Administration’s student debt relief plan, which is tied up in the courts, to eliminate the $3,500 loan she took out years ago for an esthetician license that kickstarted her career.
She paid $50 a month on the loan and said it all went toward the monthly interest.
“Fifty dollars, I can afford that,” she said. “(But) it’s not a lot going towards that balance at all. Some of this money can go towards my child, my business and I don’t have to worry about it.”
Cumberbatch is among nearly 1.4 million Michigan residents who have outstanding student loan debt totaling about $51.3 billion, according to the U.S. Department of Education’s June 30 data. Many of them could see relief this year, if the proposal survives court challenges.
President Joe Biden announced in August that he’ll cancel up to $10,000 in federal student loan debt for many borrowers and $20,000 for those who received Pell Grants. Anyone who made less than $125,000 or $250,000 as a household in the 2020 and 2021 tax years is, under the plan, eligible for relief. An estimated 40 million borrowers are eligible for some student debt relief, and another roughly 20 million are expected to have their entire balance canceled, according to the White House.
Conservatives have moved to stop the plan. The Supreme Court denied a request from a Wisconsin taxpayer group to temporarily block the plan’s implementation more than a week ago. Brown County Taxpayers Association, and several others, had filed a lawsuit alleging the U.S. Department of Education overstepped its authority to forgive debts.
The governors of Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina also filed a lawsuit jointly to block the plan. A federal judge in Missouri dismissed their case on Oct. 20. The 8th U.S. Circuit Court of Appeals in an appeal of that ruling temporarily blocked the Biden administration from moving forward with its plan.
Indebted students have a lot at stake.
According to the Federal Student Aid office, about 304,000 Michigan borrowers owe between $20,000 and $40,000. That’s the largest number of borrowers for nine debt ranges that go from less than $5,000 to more than $200,000. Those owing in that $20,000 to $40,000 range make up about 17% of the debt.
Fewer than 29,000 Michiganders owe more than $200,000.
The 35- to 49-year-old age bracket owes $19 billion — the biggest chunk — of Michigan’s student loan debt. Most Michigan student loan borrowers are between 25 and 34 years old.
Parents who took loans out for their children’s college tuition are also eligible for up to $10,000 in relief.
Qualified loans reconsidered:Student debt forgiveness curveball means some borrowers won’t be eligible
Cumberbatch owns and operates Skin Studio 211 in East Lansing and Skin Studio 211 West Lansing in Delta Township.
With hopes of a lighter financial burden, Cumberbatch recently enrolled at Lansing Community College fora kinesiology degree so she could operate a medical spa and perform dermatological services.
She expects to take out another loan but said the debt will be more bearable knowing it’s smaller than it could have been and she’ll have a greater skill set.
Cumberbatch expressed frustration with the cost of pursuing an education.
“I don’t understand why you would give us $60,000 in loans (for school), but we can’t get $60,000 for a car. That doesn’t make sense,” Cumberbatch said.
Federal and state aid lowered her expenses at the New York Institute of Beauty.
The College Board, a nonprofit organization committed to excellence and equity in education, released a 2021 report on the cost of college and student aid that stated tuition has risen, on average, 1.6% between the 2020-2021 and 2021-2022 school years prior to inflation adjustments.
According to the report, “over the 30 years between 1991-92 and 2021-22, average published tuition and fees increased from $2,310 to $3,800 at public two-year; from $4,160 to $10,740 at public four-year, and from $19,360 to $38,070 at private nonprofit four-year institutions, after adjusting for inflation.”
Respectively, that’s increases of 65%, 158% and 97%.
Jack Falinski said he graduated from Michigan State University last spring with between $20,000 and $30,000 in student loan debt. He has a degree in social relations and policy and another in journalism. He joined AmeriCorps after being waitlisted for law schools.
AmeriCorps placed Falinski at the Capital Area College Access Network last month as a support coordinator. He said he took the job because it was an opportunity to build up communities.
Falinski said AmeriCorps would pay up to $7,000 of his undergraduate loan. On top of that, he’s also eligible to receive a one-time $10,000 relief from the federal government through Biden’s plan.
Thousands of MSU students are expected to benefit from the program. According to the National Center for Education Statistics, one in every three freshman MSU students‘ 2020-2021 financial aid packages included federal loans.
Falinski doesn’t regret taking out his loans.
“You might be taking one step back, but you’re going to be taking 100 steps forward after the initial setback,” he said, adding that doors open when a person attains a higher education.
He hopes to go to graduate school at some point for urban planning.
Christopher Artis, 25, has around $10,000 in student loan debt. His mom pushed him to get an education, he said, and he took a loan to study network administration at Career Quest Learning Center. An employment agency placed him at a lumberyard for work.
Career Quest, a private for-profit, permanently closed all locations last fall.
Artis, of Lansing, regrets attending the school and acquiring the debt. He has since enrolled in online foreign trade courses. He has paid for those courses out of pocket and lives with his family to cut down costs.
He’s looking forward to applying for student loan relief.
“That relief would save me a lot of time and all that money I wouldn’t have to invest into my loans,” he said. “I can invest it in moving forward in my life and not just sitting here paying for something I consider to be a mistake.”
Some borrowers will not benefit from the federal debt relief plan. The National Center for Education Statistics reported that 6% of freshmen at MSU relied on loans that don’t qualify as federal student loans.
According to MeasureOne’s 2021 report on private student loans, those loans make up nearly 8% of the national $1.72 trillion student debt. They’re likely ineligible for relief in the recent proposal.
CBS News, however, reported borrowers can request payment pauses, refinance for lower monthly payments or interest rates or consolidate their loans.
“There’s still a lot of private loans out there that would not be eligible for neither the forgiveness nor the income-driven repayment (plans),” MSU economist Scott Imberman said.
The Biden Administration proposed a new income-driven repayment plan that officials say will substantially lower monthly payments for low- and middle-income borrowers.
According to the U.S. Department of Education’s website, borrowers won’t pay more than 5% of their net income on undergraduate loans during repayment, and the amount of their net income that is protected from repayment will be raised. The website also said the government will cover unpaid monthly interest if the borrower makes their monthly payments.
Student loan repayments are supposed to resume in January.The U.S. Department of Education suspended payments when the pandemic hit in March 2020 to provide temporary relief to borrowers.
Department officials also announced loans will be forgiven after 10 years of payments, instead of 20 years, with outstanding balances below $12,000.
Artis encouraged those considering more schooling to heavily research the schools they want to attend and explore other payment options so that if they need to take a loan out, it’s a worthwhile investment.
“You really have to look at the long-term of it because a lot can happen in life,” he said.
Your questions on relief:Student loan forgiveness: How those in college now could get a break, what’s ahead
Any of the following federally held loans with outstanding balances as of June 30 qualify:
Borrowers can apply for relief by visiting StudentAid.gov by Dec. 31, 2023. The White House cautioned borrowers to apply carefully as anyone found providing false information would be subject to fines and possibly jail time.
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Contact reporter Krystal Nurse at (517) 267-1344 or knurse@lsj.com. Follow her on Twitter @KrystalRNurse.
