Federal student loan borrowers may soon see their monthly payments cut by at least half — and potentially have their debt forgiven in as little as a decade — due to big changes the Education Department intends to make to one of its existing repayment plans.
More details on the revised income-driven repayment plan surfaced in mid-January, and the Biden administration aims to finalize changes to the new IDR plan, known as REPAYE, by the end of 2023. It’s the latest effort by President Biden to ease the weight of the nation’s collective $1.76 trillion in student loan debt by removing more roadblocks to debt forgiveness.
“There are a lot of steps between here and having [the plan] actually in place, but the potential is there for a really big impact,” says Scott Stark, a certified financial planner at Financial Finesse, a workplace financial wellness company.
That impact will be felt more by some borrowers than others. Generally, those who earn the least relative to how much they owe stand to benefit the most. IDR plans cap monthly payments at a certain percentage of a borrower’s income and forgive any remaining balance after payments have been made for a set number of years.
Here are five key beneficiaries of the fresh IDR plan, according to experts.
1. Borrowers who attended some college but didn’t graduate
People who took out student loans and attended some college — but didn’t finish and earn a bachelor’s degree — can land in a tough spot. Though they tend to have lower loan balances, they also don’t enjoy the 66% average income bump that college graduates have compared to high school graduates with some college, per 2017 data from the Economic Policy Institute, a progressive think tank.
The revised IDR plan could help: Borrowers who originally took out $12,000 or less in student debt would have their remaining balance forgiven after 10 years of qualifying monthly payments, down from 20 to 25 years under existing plans.
People who didn’t get a bachelor’s degree account for 51% of households with student debt under $10,000, according to an Urban Institute analysis of 2019 government data. Even $0 monthly payments under the revised IDR plan would count toward the 10-year forgiveness finish line.
“The administration is really looking out for people that tried college and it didn’t work out for them,” says Mike Pierce, executive director and co-founder of the Student Borrower Protection Center.
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On average, Black, Hispanic, American Indian and Alaska Native borrowers would see their lifetime payments per dollar borrowed be 50% of what they would be on the current REPAYE plan, the Department of Education estimates.
2. Borrowers in areas with a high cost of living
IDR plans cap monthly student loan payments at a certain percentage of a borrower’s discretionary income — currently, it’s your household income minus 150% of the federal poverty guideline for your family size and location. If your household income is $75,000 for a family of four in Virginia, your non-discretionary income is $45,000 and your discretionary income is $30,000. Payments under current IDR plans are a percentage of that $30,000.
The revised plan subtract 225% of the federal poverty guideline from your income, sheltering more of your earnings. That same $75,000 household would see payments based on just $7,500 of discretionary income. On top of that, undergraduate loan payments would be capped at 5% of discretionary income, instead of at least 10% under current plans, shrinking monthly payments for the example household from $250 to about $31.
This is a meaningful change for borrowers who live in expensive areas where housing, food and other costs cut further into discretionary income, explains Betsy Mayotte, president and founder of The Institute of Student Loan Advisors.
3. Borrowers at risk of delinquent or defaulted student loans
It may seem counterintuitive, but borrowers who have fairly small balances show “extraordinary” rates of default and delinquency, explains Dominique Baker, an associate professor of education policy at Southern Methodist University. There’s overlap here with borrowers who didn’t finish college: The default rate among borrowers who didn’t complete their degree is triple the rate for borrowers who earned a diploma, Education Department data shows.
Borrowers in default will be allowed to enroll in the revised IDR plan, giving them access to more affordable monthly payments and eventual loan forgiveness. Currently, student loan borrowers in default are blocked from any IDR plan.
Another perk: Borrowers who are at least 75 days late on their payments would also be automatically enrolled in the revised IDR plan. This could help struggling borrowers avoid student loan default in the first place — if they lose their job or earn less than about $32,800 per year as a single tax filer, or less than $67,500 for a family of four, they’ll qualify for $0 monthly payments under the revised plan.
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Is $20K student debt forgiveness still going to happen?
fizkes // Shutterstock
Six in 10 millennials who don't own a home say it's because of student loan debt, according to a 2021 survey from the National Association of Realtors.
College costs skyrocketed in the last two decades. Average tuition between 2010-11 and 2020-21 school years rose nearly 31% at public universities and more than 41% at private universities, according to the Education Data Initiative. Students now pay an average of $35,551 a year.
This debt has worsened the racial homeownership gap, which has widened over decades of discriminatory lending practices, racist housing policies, and barriers to wealth for Black Americans and other people of color. These trends led higher numbers of students from marginalized communities to assume additional financial risk for a college degree.
For many, loans make college possible. More than 45 million people in 2020 had student loan debt, averaging $37,693 per person, per Education Data Initiative. These costs have made it difficult for many to afford a down payment on a home. The homeownership rate falls by nearly 2 percentage points for every additional $1,000 in student loan debt a borrower holds, according to the Federal Reserve.
Stacker examined data from the Federal Reserve and the Department of Education to see how federal student loan forgiveness could boost U.S. homeownership rates, particularly among Black Americans.
Because Black Americans have historically been unable to build wealth as easily as their non-Black counterparts, they're relying more on loans to obtain big-ticket items like higher education and homeownership. Higher student loan payments and interest rates hinder their ability to buy a home and can trap them in a cycle of inequality. In August 2022, the Biden administration announced it would forgive $10,000 in student loan debt, affecting about 43 million borrowers.
Keep reading to see the effect of student loan forgiveness on Black homeownership rates in the U.S.
You may also like: 30 college majors that didn't exist 50 years ago
fizkes // Shutterstock
Six in 10 millennials who don't own a home say it's because of student loan debt, according to a 2021 survey from the National Association of Realtors.
College costs skyrocketed in the last two decades. Average tuition between 2010-11 and 2020-21 school years rose nearly 31% at public universities and more than 41% at private universities, according to the Education Data Initiative. Students now pay an average of $35,551 a year.
This debt has worsened the racial homeownership gap, which has widened over decades of discriminatory lending practices, racist housing policies, and barriers to wealth for Black Americans and other people of color. These trends led higher numbers of students from marginalized communities to assume additional financial risk for a college degree.
For many, loans make college possible. More than 45 million people in 2020 had student loan debt, averaging $37,693 per person, per Education Data Initiative. These costs have made it difficult for many to afford a down payment on a home. The homeownership rate falls by nearly 2 percentage points for every additional $1,000 in student loan debt a borrower holds, according to the Federal Reserve.
Stacker examined data from the Federal Reserve and the Department of Education to see how federal student loan forgiveness could boost U.S. homeownership rates, particularly among Black Americans.
Because Black Americans have historically been unable to build wealth as easily as their non-Black counterparts, they're relying more on loans to obtain big-ticket items like higher education and homeownership. Higher student loan payments and interest rates hinder their ability to buy a home and can trap them in a cycle of inequality. In August 2022, the Biden administration announced it would forgive $10,000 in student loan debt, affecting about 43 million borrowers.
Keep reading to see the effect of student loan forgiveness on Black homeownership rates in the U.S.
You may also like: 30 college majors that didn't exist 50 years ago
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Is $20K student debt forgiveness still going to happen?
Stacker
Student loan debt has nearly tripled since 2006.
Although total debt continues to increase, the growth rate decelerated considerably. In 2013, the year-over-year change was 12.1%; last year, it was 0.31%.
The federal government paused federal student loan payments during the pandemic, which set interest rates at 0% and allowed borrowers to skip loan payments without the risk of late fees or default. This policy helped 4.7 million people lower their balances, but it's due to expire at the end of 2022.
Stacker
Student loan debt has nearly tripled since 2006.
Although total debt continues to increase, the growth rate decelerated considerably. In 2013, the year-over-year change was 12.1%; last year, it was 0.31%.
The federal government paused federal student loan payments during the pandemic, which set interest rates at 0% and allowed borrowers to skip loan payments without the risk of late fees or default. This policy helped 4.7 million people lower their balances, but it's due to expire at the end of 2022.
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Is $20K student debt forgiveness still going to happen?
Stacker
A Brookings Institute analysis found that Black Americans face a cycle of inequality when paying for higher education. The report found that Black American households cannot build wealth at the same rate as non-Black households. This finding also means Black students borrow more money for college and have higher loan payments upon graduation, which reduces their opportunities to build wealth during their prime earning years.
Hispanic Americans also experience a wealth gap, which fuels the need to take out more in student loans, according to UnidosUS. Many Hispanic Americans are also first-generation college students, which can make it difficult for them to navigate the financial aid system.
Stacker
A Brookings Institute analysis found that Black Americans face a cycle of inequality when paying for higher education. The report found that Black American households cannot build wealth at the same rate as non-Black households. This finding also means Black students borrow more money for college and have higher loan payments upon graduation, which reduces their opportunities to build wealth during their prime earning years.
Hispanic Americans also experience a wealth gap, which fuels the need to take out more in student loans, according to UnidosUS. Many Hispanic Americans are also first-generation college students, which can make it difficult for them to navigate the financial aid system.
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Is $20K student debt forgiveness still going to happen?
Stacker
The Black homeownership rate (43.4%) lags considerably behind white Americans (72.1%) and has declined by nearly 1 percentage point since 2010, according to the National Association of Realtors. In fact, that gap is wider today than when the Fair Housing Act was passed in 1968.
Black households also lag in earnings, making only 61 cents for every dollar that comparable white households earn, according to an analysis by the Economic Policy Institute of the latest Census Bureau data. With lower earnings on average, Black Americans are denied mortgages at double the national average, according to a 2022 LendingTree study.
Black Americans will often seek higher education to help increase their earning potential. Still, it's hard to take on more debt when student loan debt payments make up a significant portion of a monthly budget. Due to student loan debt, nearly half of Black Americans said they would likely delay homeownership.
Stacker
The Black homeownership rate (43.4%) lags considerably behind white Americans (72.1%) and has declined by nearly 1 percentage point since 2010, according to the National Association of Realtors. In fact, that gap is wider today than when the Fair Housing Act was passed in 1968.
Black households also lag in earnings, making only 61 cents for every dollar that comparable white households earn, according to an analysis by the Economic Policy Institute of the latest Census Bureau data. With lower earnings on average, Black Americans are denied mortgages at double the national average, according to a 2022 LendingTree study.
Black Americans will often seek higher education to help increase their earning potential. Still, it's hard to take on more debt when student loan debt payments make up a significant portion of a monthly budget. Due to student loan debt, nearly half of Black Americans said they would likely delay homeownership.
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Is $20K student debt forgiveness still going to happen?
fizkes // Shutterstock
Black Americans face disparities in wealth building, and student loans have exacerbated that issue. More than half of Black American households with student loan debt have no or negative net worth, about twice as much as those with no student debt, according to a Brookings Institute analysis.
Student loan forgiveness would not eliminate the racial wealth gap but could significantly reduce it. Loan forgiveness may also present more opportunities for Black Americans to afford homes and build intergenerational wealth consistent with the American Dream.
fizkes // Shutterstock
Black Americans face disparities in wealth building, and student loans have exacerbated that issue. More than half of Black American households with student loan debt have no or negative net worth, about twice as much as those with no student debt, according to a Brookings Institute analysis.
Student loan forgiveness would not eliminate the racial wealth gap but could significantly reduce it. Loan forgiveness may also present more opportunities for Black Americans to afford homes and build intergenerational wealth consistent with the American Dream.
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What’s a Pell grant? How it affects student loan forgiveness
Michael Barera // Wikimedia Commons
In the late 1980s, a high school graduate who wanted to attend college or university was looking at average tuition of $15,160 per year for a private, nonprofit school and $3,190 per year for a public college or university. As of 2021, that number had ballooned to $37,600 for private, nonprofit colleges and $9,400 for public schools. Once the cost of books, room and board, and other fees are added in, paying for college with a part-time or summer job is increasingly becoming a thing of the past.
Today's students are instead turning to loans, leading to a widespread debt crisis. Americans currently owe a collective $1.58 trillion in student loans, changing the shape and trajectory of the U.S. economy. Instead of buying cars or houses, many millennials are focused on finding jobs that will enable them to make loan payments without defaulting.
Some states are taking steps to help by adopting a Student Borrower Bill of Rights and offering a variety of scholarship and loan repayment programs for qualified graduates. In New York in 2017, for example, New York announced a scholarship program that would provide free tuition at public colleges to residents whose families make less than $125,000 a year.
Stacker looked at 2022 data from the Federal Reserve of New York to determine where student debt is hitting the nation the hardest. In the case of a tie, we looked at the number of borrowers in all tied states.
Read on to see where your state falls on the list.
You may also like: Highest-paying management jobs
Michael Barera // Wikimedia Commons
In the late 1980s, a high school graduate who wanted to attend college or university was looking at average tuition of $15,160 per year for a private, nonprofit school and $3,190 per year for a public college or university. As of 2021, that number had ballooned to $37,600 for private, nonprofit colleges and $9,400 for public schools. Once the cost of books, room and board, and other fees are added in, paying for college with a part-time or summer job is increasingly becoming a thing of the past.
Today's students are instead turning to loans, leading to a widespread debt crisis. Americans currently owe a collective $1.58 trillion in student loans, changing the shape and trajectory of the U.S. economy. Instead of buying cars or houses, many millennials are focused on finding jobs that will enable them to make loan payments without defaulting.
Some states are taking steps to help by adopting a Student Borrower Bill of Rights and offering a variety of scholarship and loan repayment programs for qualified graduates. In New York in 2017, for example, New York announced a scholarship program that would provide free tuition at public colleges to residents whose families make less than $125,000 a year.
Stacker looked at 2022 data from the Federal Reserve of New York to determine where student debt is hitting the nation the hardest. In the case of a tie, we looked at the number of borrowers in all tied states.
Read on to see where your state falls on the list.
You may also like: Highest-paying management jobs
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What’s a Pell grant? How it affects student loan forgiveness
Jacob Boomsma // Shutterstock
- Number of borrowers: 135,600
- Average loan balance per borrower: $28,218
South Dakota participates in the Teacher Loan Forgiveness Program, while the Dakota Corps Scholarship aims to help students in the state.
Jacob Boomsma // Shutterstock
- Number of borrowers: 135,600
- Average loan balance per borrower: $28,218
South Dakota participates in the Teacher Loan Forgiveness Program, while the Dakota Corps Scholarship aims to help students in the state.
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What’s a Pell grant? How it affects student loan forgiveness
Tony Webster // Flickr
- Number of borrowers: 465,500
- Average loan balance per borrower: $29,845
Iowa has a number of student loan forgiveness programs, including programs for teachers, nurses, doctors, physician assistants, and other health care providers.
Tony Webster // Flickr
- Number of borrowers: 465,500
- Average loan balance per borrower: $29,845
Iowa has a number of student loan forgiveness programs, including programs for teachers, nurses, doctors, physician assistants, and other health care providers.
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What’s a Pell grant? How it affects student loan forgiveness
Enrico Blasutto // Wikimedia Commons
- Number of borrowers: 70,600
- Average loan balance per borrower: $30,427
Alaska offers a loan repayment program for health care workers who will live and work in areas with a shortage of medical, dental, and behavioral health professionals. The state is among those with the lowest proportion of students with debt, according to WalletHub.
Enrico Blasutto // Wikimedia Commons
- Number of borrowers: 70,600
- Average loan balance per borrower: $30,427
Alaska offers a loan repayment program for health care workers who will live and work in areas with a shortage of medical, dental, and behavioral health professionals. The state is among those with the lowest proportion of students with debt, according to WalletHub.
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What’s a Pell grant? How it affects student loan forgiveness
MatthewUND // Wikimedia Commons
- Number of borrowers: 114,100
- Average loan balance per borrower: $30,542
Veterinarians can qualify for loan forgiveness in North Dakota if they will serve in high-need areas. Three are chosen each year, with the goal of attracting new veterinarians for animals raised for meat.
MatthewUND // Wikimedia Commons
- Number of borrowers: 114,100
- Average loan balance per borrower: $30,542
Veterinarians can qualify for loan forgiveness in North Dakota if they will serve in high-need areas. Three are chosen each year, with the goal of attracting new veterinarians for animals raised for meat.
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What’s a Pell grant? How it affects student loan forgiveness
Thecoldmidwest // Wikimedia Commons
- Number of borrowers: 57,600
- Average loan balance per borrower: $30,581
Wyoming's Hathaway Scholarship, created in 2005 with a $400 million permanent endowment, pays for qualified high school graduates to attend the University of Wyoming or any of the state's seven community colleges. The Wyoming Healthcare Professional Loan Repayment Program repays health professionals' educational loans if they practice in an underserved area for at least three years.
Thecoldmidwest // Wikimedia Commons
- Number of borrowers: 57,600
- Average loan balance per borrower: $30,581
Wyoming's Hathaway Scholarship, created in 2005 with a $400 million permanent endowment, pays for qualified high school graduates to attend the University of Wyoming or any of the state's seven community colleges. The Wyoming Healthcare Professional Loan Repayment Program repays health professionals' educational loans if they practice in an underserved area for at least three years.
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What’s a Pell grant? How it affects student loan forgiveness
Ron Cogswell // Flickr
- Number of borrowers: 785,600
- Average loan balance per borrower: $31,482
In 2020, Wisconsin's governor created a task force to look for ways to reduce student debt in the state. The loans disproportionately affect low-income and first-generation college students, students of color, women, and veterans, according to the governor.
You may also like: 50 best public colleges ranked from least to most expensive
Ron Cogswell // Flickr
- Number of borrowers: 785,600
- Average loan balance per borrower: $31,482
In 2020, Wisconsin's governor created a task force to look for ways to reduce student debt in the state. The loans disproportionately affect low-income and first-generation college students, students of color, women, and veterans, according to the governor.
You may also like: 50 best public colleges ranked from least to most expensive
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What’s a Pell grant? How it affects student loan forgiveness
Hanyou23 // Wikimedia Commons
- Number of borrowers: 261,000
- Average loan balance per borrower: $31,551
Primary care doctors, dentists, and other medical professionals are eligible for loan repayment awards in Nebraska if they practice in areas where there are shortages.
Hanyou23 // Wikimedia Commons
- Number of borrowers: 261,000
- Average loan balance per borrower: $31,551
Primary care doctors, dentists, and other medical professionals are eligible for loan repayment awards in Nebraska if they practice in areas where there are shortages.
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What’s a Pell grant? How it affects student loan forgiveness
Brandonrush // Wikimedia Commons
- Number of borrowers: 374,900
- Average loan balance per borrower: $31,851
After Arkansas began a default management program in 2013, students' default rates fell almost every year. From 2013 to 2018, Arkansas' default rate dropped 7.8 percentage points, compared to the national rate, which fell 3.9 percentage points. By the end of 2021, the state's delinquency rate was 9%.
Brandonrush // Wikimedia Commons
- Number of borrowers: 374,900
- Average loan balance per borrower: $31,851
After Arkansas began a default management program in 2013, students' default rates fell almost every year. From 2013 to 2018, Arkansas' default rate dropped 7.8 percentage points, compared to the national rate, which fell 3.9 percentage points. By the end of 2021, the state's delinquency rate was 9%.
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What’s a Pell grant? How it affects student loan forgiveness
IT Communications Office // Flickr
- Number of borrowers: 924,000
- Average loan balance per borrower: $32,045
Indiana provides student loan relief for lawyers working in legal aid through its Richard M. Givan Loan Repayment Assistance program. Another program, Hon. J. Terrence and Peggy Cody Loan Repayment Assistance, provides aid to law school graduates working in child services. Legal scholarships are also available.
IT Communications Office // Flickr
- Number of borrowers: 924,000
- Average loan balance per borrower: $32,045
Indiana provides student loan relief for lawyers working in legal aid through its Richard M. Givan Loan Repayment Assistance program. Another program, Hon. J. Terrence and Peggy Cody Loan Repayment Assistance, provides aid to law school graduates working in child services. Legal scholarships are also available.
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What’s a Pell grant? How it affects student loan forgiveness
Sage Ross // Flickr
- Number of borrowers: 480,800
- Average loan balance per borrower: $32,102
Oklahoma offers loan forgiveness to physicians, dentists, and other health professionals who agree to serve in specific communities in the state.
Sage Ross // Flickr
- Number of borrowers: 480,800
- Average loan balance per borrower: $32,102
Oklahoma offers loan forgiveness to physicians, dentists, and other health professionals who agree to serve in specific communities in the state.
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What’s a Pell grant? How it affects student loan forgiveness
Swimmerguy269 // Wikimedia Commons
- Number of borrowers: 217,200
- Average loan balance per borrower: $32,214
West Virginia recruits medical professionals to rural areas through student loan forgiveness. It looks for doctors, nurses, midwives, physician assistants, pharmacists, dentists, and other providers.
Swimmerguy269 // Wikimedia Commons
- Number of borrowers: 217,200
- Average loan balance per borrower: $32,214
West Virginia recruits medical professionals to rural areas through student loan forgiveness. It looks for doctors, nurses, midwives, physician assistants, pharmacists, dentists, and other providers.
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What’s a Pell grant? How it affects student loan forgiveness
Jitze Couperus // Flickr
- Number of borrowers: 132,900
- Average loan balance per borrower: $32,459
In Montana, medical professionals can receive up to $15,000 a year by working in certain areas in the state through the Montana State Loan Repayment Program.
Jitze Couperus // Flickr
- Number of borrowers: 132,900
- Average loan balance per borrower: $32,459
In Montana, medical professionals can receive up to $15,000 a year by working in certain areas in the state through the Montana State Loan Repayment Program.
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What’s a Pell grant? How it affects student loan forgiveness
Eugene Kim // Flickr
- Number of borrowers: 215,500
- Average loan balance per borrower: $32,944
For students at risk of defaulting on loans, New Mexico offers student loan forgiveness and consolidation of debt. Doctors and nurses who help address the health care shortage in New Mexico can qualify for no-interest loans and other benefits.
Eugene Kim // Flickr
- Number of borrowers: 215,500
- Average loan balance per borrower: $32,944
For students at risk of defaulting on loans, New Mexico offers student loan forgiveness and consolidation of debt. Doctors and nurses who help address the health care shortage in New Mexico can qualify for no-interest loans and other benefits.
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What’s a Pell grant? How it affects student loan forgiveness
Larry D. Moore // Wikimedia Commons
- Number of borrowers: 3,759,300
- Average loan balance per borrower: $32,998
A 2019 study by Southern Methodist University found that Black and Hispanic students in Texas borrow more than white students on average: $7,124 more for Black students and $453 for Hispanic students; meanwhile, Asian students borrow $3,155 less.
Larry D. Moore // Wikimedia Commons
- Number of borrowers: 3,759,300
- Average loan balance per borrower: $32,998
A 2019 study by Southern Methodist University found that Black and Hispanic students in Texas borrow more than white students on average: $7,124 more for Black students and $453 for Hispanic students; meanwhile, Asian students borrow $3,155 less.
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What’s a Pell grant? How it affects student loan forgiveness
Millyard800 // Wikimedia Commons
- Number of borrowers: 219,000
- Average loan balance per borrower: $33,094
New Hampshire offers student loan forgiveness to primary care doctors, dentists, and other health care providers, with the goal of drawing them to underserved or low-income areas. It also offers help to lawyers working for nonprofit organizations.
Millyard800 // Wikimedia Commons
- Number of borrowers: 219,000
- Average loan balance per borrower: $33,094
New Hampshire offers student loan forgiveness to primary care doctors, dentists, and other health care providers, with the goal of drawing them to underserved or low-income areas. It also offers help to lawyers working for nonprofit organizations.
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What’s a Pell grant? How it affects student loan forgiveness
Tom Ipri // Flickr
- Number of borrowers: 588,800
- Average loan balance per borrower: $33,155
By the end of 2021, Kentucky had a student loan delinquency rate of 10%, putting it among the top five states with the highest delinquency rates in the country. Kentucky has a loan repayment program for health care professionals who work in rural and underserved areas.
Tom Ipri // Flickr
- Number of borrowers: 588,800
- Average loan balance per borrower: $33,155
By the end of 2021, Kentucky had a student loan delinquency rate of 10%, putting it among the top five states with the highest delinquency rates in the country. Kentucky has a loan repayment program for health care professionals who work in rural and underserved areas.
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What’s a Pell grant? How it affects student loan forgiveness
August Schwerdfeger // Flickr
August Schwerdfeger // Flickr
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What’s a Pell grant? How it affects student loan forgiveness
Jaren Wilkey // Wikimedia Commons
Jaren Wilkey // Wikimedia Commons
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What’s a Pell grant? How it affects student loan forgiveness
Jalnet2 // Wikimedia Commons
- Number of borrowers: 203,200
- Average loan balance per borrower: $33,584
On average, Maine college graduates owed more than $33,500 each in student loans. The state offers student debt relief to graduates who live and work there under the Educational Opportunity Tax Credit.
Jalnet2 // Wikimedia Commons
- Number of borrowers: 203,200
- Average loan balance per borrower: $33,584
On average, Maine college graduates owed more than $33,500 each in student loans. The state offers student debt relief to graduates who live and work there under the Educational Opportunity Tax Credit.
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What’s a Pell grant? How it affects student loan forgiveness
Tnricci // Wikimedia Commons
- Number of borrowers: 153,200
- Average loan balance per borrower: $33,838
The Rhode Island Student Loan Authority offers low-cost student loans, refinancing choices, and free tools to find internships and scholarships. In 2019, it enacted a Student Loan Bill of Rights to make sure borrowers are treated fairly.
Tnricci // Wikimedia Commons
- Number of borrowers: 153,200
- Average loan balance per borrower: $33,838
The Rhode Island Student Loan Authority offers low-cost student loans, refinancing choices, and free tools to find internships and scholarships. In 2019, it enacted a Student Loan Bill of Rights to make sure borrowers are treated fairly.
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What’s a Pell grant? How it affects student loan forgiveness
Nightryder84 // Wikimedia Commons
- Number of borrowers: 395,200
- Average loan balance per borrower: $33,954
Kansas offers loan repayment relief to students who will live in rural areas, are health care professionals, and are primary care or psychiatry residents through its Bridging Plan.
Nightryder84 // Wikimedia Commons
- Number of borrowers: 395,200
- Average loan balance per borrower: $33,954
Kansas offers loan repayment relief to students who will live in rural areas, are health care professionals, and are primary care or psychiatry residents through its Bridging Plan.
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What’s a Pell grant? How it affects student loan forgiveness
Apstrinka // Wikimedia Commons
- Number of borrowers: 219,400
- Average loan balance per borrower: $34,196
Idaho provides loan forgiveness programs for those working in areas short on health professionals. This includes physicians, clinicians, and nurses in rural and underserved areas. Idaho students owe, on average, $34,196.
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Apstrinka // Wikimedia Commons
- Number of borrowers: 219,400
- Average loan balance per borrower: $34,196
Idaho provides loan forgiveness programs for those working in areas short on health professionals. This includes physicians, clinicians, and nurses in rural and underserved areas. Idaho students owe, on average, $34,196.
You may also like: Best value colleges in every state
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What’s a Pell grant? How it affects student loan forgiveness
The University of Vermont // Flickr
- Number of borrowers: 96,300
- Average loan balance per borrower: $34,595
Vermont has the highest number of student loan borrowers who are 50 or older, according to a 2019 WalletHub study. Student loan debt there averaged $34,595 per borrower by the end of 2021—about $5000 more than the national average.
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The University of Vermont // Flickr
- Number of borrowers: 96,300
- Average loan balance per borrower: $34,595
Vermont has the highest number of student loan borrowers who are 50 or older, according to a 2019 WalletHub study. Student loan debt there averaged $34,595 per borrower by the end of 2021—about $5000 more than the national average.
You may also like: Colleges that are richer than some countries
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What’s a Pell grant? How it affects student loan forgiveness
Vreed // Wikimedia Commons
- Number of borrowers: 123,600
- Average loan balance per borrower: $34,608
The 10 campuses of the University of Hawaii are considered affordable, with in-state tuition at the three four-year schools below the national average. The state also has programs to keep costs down—namely the Hawaii Promise scholarship program for community college students and the Hawaii State Loan Repayment Program, which provides grants to health care professionals who fill geographic shortages.
Vreed // Wikimedia Commons
- Number of borrowers: 123,600
- Average loan balance per borrower: $34,608
The 10 campuses of the University of Hawaii are considered affordable, with in-state tuition at the three four-year schools below the national average. The state also has programs to keep costs down—namely the Hawaii Promise scholarship program for community college students and the Hawaii State Loan Repayment Program, which provides grants to health care professionals who fill geographic shortages.
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What’s a Pell grant? How it affects student loan forgiveness
Louisiana Travel // Flickr
- Number of borrowers: 644,600
- Average loan balance per borrower: $34,839
In 2022, Louisiana reported that more than half of its high school graduates were eligible for state scholarships for college. The state's FY23 budget also includes a 12% increase in funding for higher education.
Louisiana Travel // Flickr
- Number of borrowers: 644,600
- Average loan balance per borrower: $34,839
In 2022, Louisiana reported that more than half of its high school graduates were eligible for state scholarships for college. The state's FY23 budget also includes a 12% increase in funding for higher education.
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What’s a Pell grant? How it affects student loan forgiveness
Joe Mabel // Wikimedia Commons
- Number of borrowers: 816,900
- Average loan balance per borrower: $34,846
The Student Loan Survival Guide, published by the Washington attorney general's office, offers links to resources for financing higher education to every high school student considering college loans and former college students who struggled with the cost of school.
Joe Mabel // Wikimedia Commons
- Number of borrowers: 816,900
- Average loan balance per borrower: $34,846
The Student Loan Survival Guide, published by the Washington attorney general's office, offers links to resources for financing higher education to every high school student considering college loans and former college students who struggled with the cost of school.
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What’s a Pell grant? How it affects student loan forgiveness
Adam Procter // Flickr
- Number of borrowers: 829,100
- Average loan balance per borrower: $35,095
In Missouri, 58% of graduates had student loan debt in 2017, and they owed an average of $28,650. By the end of 2021, borrowers owed more than $35,000 each on average. The state offers student loan forgiveness to some employees of government agencies or nonprofit organizations.
Adam Procter // Flickr
- Number of borrowers: 829,100
- Average loan balance per borrower: $35,095
In Missouri, 58% of graduates had student loan debt in 2017, and they owed an average of $28,650. By the end of 2021, borrowers owed more than $35,000 each on average. The state offers student loan forgiveness to some employees of government agencies or nonprofit organizations.
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What’s a Pell grant? How it affects student loan forgiveness
shidairyproduct // Flickr
- Number of borrowers: 2,032,400
- Average loan balance per borrower: $35,349
With its borrowers owing more than $35,000 each on average, Pennsylvania has some of the highest student debt in the country. It hovers around the middle of the pack for delinquency rate, though, at 7.2%
shidairyproduct // Flickr
- Number of borrowers: 2,032,400
- Average loan balance per borrower: $35,349
With its borrowers owing more than $35,000 each on average, Pennsylvania has some of the highest student debt in the country. It hovers around the middle of the pack for delinquency rate, though, at 7.2%
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What’s a Pell grant? How it affects student loan forgiveness
John Phelan // Wikimedia Commons
- Number of borrowers: 1,046,800
- Average loan balance per borrower: $35,400
In 2021, Massachusetts put into place a Student Borrowers Bill of Rights and appointed a Student Loan Ombudsman in order to protect student borrowers.
John Phelan // Wikimedia Commons
- Number of borrowers: 1,046,800
- Average loan balance per borrower: $35,400
In 2021, Massachusetts put into place a Student Borrowers Bill of Rights and appointed a Student Loan Ombudsman in order to protect student borrowers.
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What’s a Pell grant? How it affects student loan forgiveness
Ken L. // Wikimedia Commons
- Number of borrowers: 351,300
- Average loan balance per borrower: $35,688
Nevada State College provides students with access to a financial literacy program. Still, in the last quarter of 2021, the state's loan delinquency rate was the fifth-highest in the nation.
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Ken L. // Wikimedia Commons
- Number of borrowers: 351,300
- Average loan balance per borrower: $35,688
Nevada State College provides students with access to a financial literacy program. Still, in the last quarter of 2021, the state's loan delinquency rate was the fifth-highest in the nation.
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What’s a Pell grant? How it affects student loan forgiveness
Michael Barera // Wikimedia Commons
- Number of borrowers: 1,810,900
- Average loan balance per borrower: $35,806
Ohio offers a variety of repayment programs for doctors, dentists, and other health care providers, including the Ohio Department of Health State Loan Repayment Program, the Ohio Physician Loan Repayment Program, the Ohio Dentist and Dental Hygienist Loan Repayment Program, and the Nurse Education Assistance Loan Program.
Michael Barera // Wikimedia Commons
- Number of borrowers: 1,810,900
- Average loan balance per borrower: $35,806
Ohio offers a variety of repayment programs for doctors, dentists, and other health care providers, including the Ohio Department of Health State Loan Repayment Program, the Ohio Physician Loan Repayment Program, the Ohio Dentist and Dental Hygienist Loan Repayment Program, and the Nurse Education Assistance Loan Program.
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What’s a Pell grant? How it affects student loan forgiveness
Nightryder84 // Wikimedia Commons
- Number of borrowers: 872,000
- Average loan balance per borrower: $36,155
Tennessee offers a loan forgiveness program for state residents who are registered nurses that agree to become administrators or teachers in nursing education programs. It also offers a Minority Teaching Fellows Program that grants $5000 per year for qualified students pursuing teacher certification at an eligible Tennessee college.
Nightryder84 // Wikimedia Commons
- Number of borrowers: 872,000
- Average loan balance per borrower: $36,155
Tennessee offers a loan forgiveness program for state residents who are registered nurses that agree to become administrators or teachers in nursing education programs. It also offers a Minority Teaching Fellows Program that grants $5000 per year for qualified students pursuing teacher certification at an eligible Tennessee college.
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What’s a Pell grant? How it affects student loan forgiveness
AndrewHorne // Wikimedia Commons
- Number of borrowers: 1,430,900
- Average loan balance per borrower: $36,221
Michigan places fifth in student loan debt as a percentage of income, according to a 2019 WalletHub study. The state offers scholarships or loan forgiveness programs for teachers, nurses, doctors, dentists, and other health care professionals.
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AndrewHorne // Wikimedia Commons
- Number of borrowers: 1,430,900
- Average loan balance per borrower: $36,221
Michigan places fifth in student loan debt as a percentage of income, according to a 2019 WalletHub study. The state offers scholarships or loan forgiveness programs for teachers, nurses, doctors, dentists, and other health care professionals.
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What’s a Pell grant? How it affects student loan forgiveness
Adam Jones Ph.D. // Wikicommons
- Number of borrowers: 414,300
- Average loan balance per borrower: $36,366
Mississippi offers forgivable loans to nurses and teachers in undergraduate programs and to counselors, school administrators, dyslexia therapists, and speech pathologists in graduate programs.
Adam Jones Ph.D. // Wikicommons
- Number of borrowers: 414,300
- Average loan balance per borrower: $36,366
Mississippi offers forgivable loans to nurses and teachers in undergraduate programs and to counselors, school administrators, dyslexia therapists, and speech pathologists in graduate programs.
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What’s a Pell grant? How it affects student loan forgiveness
Daderot // Wikimedia Commons
- Number of borrowers: 542,800
- Average loan balance per borrower: $36,391
In April 2020, Connecticut's governor announced that in collaboration with other states, Connecticut had reached an agreement for relief for some privately held student loans. The state also offers a Minority Teacher Incentive program that provides grants to students and loan reimbursement of up to $2,500 a year for participants who become teachers for Connecticut's public school system.
Daderot // Wikimedia Commons
- Number of borrowers: 542,800
- Average loan balance per borrower: $36,391
In April 2020, Connecticut's governor announced that in collaboration with other states, Connecticut had reached an agreement for relief for some privately held student loans. The state also offers a Minority Teacher Incentive program that provides grants to students and loan reimbursement of up to $2,500 a year for participants who become teachers for Connecticut's public school system.
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What’s a Pell grant? How it affects student loan forgiveness
Wars // Wikimedia Commons
- Number of borrowers: 872,600
- Average loan balance per borrower: $36,682
The student loan delinquency rate for borrowers in Arizona was 8.7% at the end of 2021—down 3% from the previous year. The state has a few loan repayment programs for teachers and qualified borrowers working in health services.
Wars // Wikimedia Commons
- Number of borrowers: 872,600
- Average loan balance per borrower: $36,682
The student loan delinquency rate for borrowers in Arizona was 8.7% at the end of 2021—down 3% from the previous year. The state has a few loan repayment programs for teachers and qualified borrowers working in health services.
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What’s a Pell grant? How it affects student loan forgiveness
Dfscgt21 // Wikimedia Commons
- Number of borrowers: 745,500
- Average loan balance per borrower: $36,698
A WalletHub study in 2019 found that South Carolina ranked fourth for debt as a percentage of income in the U.S. The state offers several types of loans and loan forgiveness programs for students pursuing the teaching profession and graduates serving as teachers.
Dfscgt21 // Wikimedia Commons
- Number of borrowers: 745,500
- Average loan balance per borrower: $36,698
A WalletHub study in 2019 found that South Carolina ranked fourth for debt as a percentage of income in the U.S. The state offers several types of loans and loan forgiveness programs for students pursuing the teaching profession and graduates serving as teachers.
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What’s a Pell grant? How it affects student loan forgiveness
Lacwal12 // Wikimedia Commons
- Number of borrowers: 1,339,800
- Average loan balance per borrower: $37,003
Although New Jersey borrowers owe more than borrowers in 36 other states as of the last quarter of 2021, the state has a borrower delinquency rate of just 5.8%—which is better than 37 other states. The state also offers loan redemption programs for borrowers in specific professions, including lawyers, nursing instructors, and primary care health providers.
Lacwal12 // Wikimedia Commons
- Number of borrowers: 1,339,800
- Average loan balance per borrower: $37,003
Although New Jersey borrowers owe more than borrowers in 36 other states as of the last quarter of 2021, the state has a borrower delinquency rate of just 5.8%—which is better than 37 other states. The state also offers loan redemption programs for borrowers in specific professions, including lawyers, nursing instructors, and primary care health providers.
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What’s a Pell grant? How it affects student loan forgiveness
Cooopersmith // Wikimedia Commons
- Number of borrowers: 804,300
- Average loan balance per borrower: $37,235
Colorado is more reliant on tuition than other states. In fact, 70% of funding for higher education in the state comes from tuition; the national average is 46.6%. This policy forces many students in Colorado to borrow.
Cooopersmith // Wikimedia Commons
- Number of borrowers: 804,300
- Average loan balance per borrower: $37,235
Colorado is more reliant on tuition than other states. In fact, 70% of funding for higher education in the state comes from tuition; the national average is 46.6%. This policy forces many students in Colorado to borrow.
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What’s a Pell grant? How it affects student loan forgiveness
Caroline Culler // Wikimedia Commons
Caroline Culler // Wikimedia Commons
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What’s a Pell grant? How it affects student loan forgiveness
Deutschlandreform // Wikimedia Commons
- Number of borrowers: 615,800
- Average loan balance per borrower: $37,730
Alabama ranks in the top states for rising student debt over five years, according to an Experian analysis in 2019, and 50.3% of borrowers are under age 35. The state offers a student grant program for qualified applicants that attend one of 12 participating colleges.
Deutschlandreform // Wikimedia Commons
- Number of borrowers: 615,800
- Average loan balance per borrower: $37,730
Alabama ranks in the top states for rising student debt over five years, according to an Experian analysis in 2019, and 50.3% of borrowers are under age 35. The state offers a student grant program for qualified applicants that attend one of 12 participating colleges.
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What’s a Pell grant? How it affects student loan forgiveness
Michael Camilleri // Flickr
- Number of borrowers: 4,021,200
- Average loan balance per borrower: $37,783
In September 2020, California's governor signed the Student Borrower Bill of Rights into law. The law helps students participate in loan repayment and forgiveness programs. The California State Loan Repayment Program offers relief to doctors, nurses, midwives, pharmacists, and other health care providers who will practice in areas of the state where they are most needed.
Michael Camilleri // Flickr
- Number of borrowers: 4,021,200
- Average loan balance per borrower: $37,783
In September 2020, California's governor signed the Student Borrower Bill of Rights into law. The law helps students participate in loan repayment and forgiveness programs. The California State Loan Repayment Program offers relief to doctors, nurses, midwives, pharmacists, and other health care providers who will practice in areas of the state where they are most needed.
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What’s a Pell grant? How it affects student loan forgiveness
Ibrahim Old // Wikimedia Commons
- Number of borrowers: 1,713,900
- Average loan balance per borrower: $37,869
College loans in Illinois can be refinanced at low interest rates by the Illinois Treasurer's Office under the Illinois Student Loan Investment Act passed in 2019. Some 17% of the state's population has student loan debt. Its balance per borrower is nearing $40,000 —which is among the top 10 highest.
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Ibrahim Old // Wikimedia Commons
- Number of borrowers: 1,713,900
- Average loan balance per borrower: $37,869
College loans in Illinois can be refinanced at low interest rates by the Illinois Treasurer's Office under the Illinois Student Loan Investment Act passed in 2019. Some 17% of the state's population has student loan debt. Its balance per borrower is nearing $40,000 —which is among the top 10 highest.
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What’s a Pell grant? How it affects student loan forgiveness
Don Hankins // Flickr
- Number of borrowers: 556,000
- Average loan balance per borrower: $38,248
Oregon's borrower delinquency rate was 8.3% as of the end of 2021—down three percent from the previous year. The state offers forgiveness and incentive programs for health care providers and lawyers.
Don Hankins // Flickr
- Number of borrowers: 556,000
- Average loan balance per borrower: $38,248
Oregon's borrower delinquency rate was 8.3% as of the end of 2021—down three percent from the previous year. The state offers forgiveness and incentive programs for health care providers and lawyers.
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What’s a Pell grant? How it affects student loan forgiveness
Jackson Myers // Flickr
- Number of borrowers: 2,646,400
- Average loan balance per borrower: $38,653
Florida passed a law in 2020 to protect graduates' professional licenses if they defaulted on their loans; prior to the passage of this law, graduates could have professional licenses revoked for failing to pay their student loans. Florida also has forgiveness programs for different professions, including the law and nursing fields.
Jackson Myers // Flickr
- Number of borrowers: 2,646,400
- Average loan balance per borrower: $38,653
Florida passed a law in 2020 to protect graduates' professional licenses if they defaulted on their loans; prior to the passage of this law, graduates could have professional licenses revoked for failing to pay their student loans. Florida also has forgiveness programs for different professions, including the law and nursing fields.
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What’s a Pell grant? How it affects student loan forgiveness
InSapphoWeTrust // Flickr
- Number of borrowers: 2,579,600
- Average loan balance per borrower: $38,668
College graduates of an approved New York State college or university who agree to operate a farm in the state full time for five years can obtain loan forgiveness under a young farmers program. The state has forgiveness programs for a number of other professions as well.
InSapphoWeTrust // Flickr
- Number of borrowers: 2,579,600
- Average loan balance per borrower: $38,668
College graduates of an approved New York State college or university who agree to operate a farm in the state full time for five years can obtain loan forgiveness under a young farmers program. The state has forgiveness programs for a number of other professions as well.
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What’s a Pell grant? How it affects student loan forgiveness
Aaron Josephson // Wikimedia Commons
- Number of borrowers: 1,143,200
- Average loan balance per borrower: $39,001
Among Virginia's graduates, 57% had student loan debt, according to a 2019 report from the nonprofit The Institute for College Access and Success. In 2021, the state passed a bill of rights for student borrowers.
Aaron Josephson // Wikimedia Commons
- Number of borrowers: 1,143,200
- Average loan balance per borrower: $39,001
Among Virginia's graduates, 57% had student loan debt, according to a 2019 report from the nonprofit The Institute for College Access and Success. In 2021, the state passed a bill of rights for student borrowers.
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What’s a Pell grant? How it affects student loan forgiveness
Artstuffmatters // Wikimedia Commons
- Number of borrowers: 137,300
- Average loan balance per borrower: $39,238
Delaware's average debt per borrower is among the highest in the country; only Georgia, Maryland, and Washington D.C. surpass it. Delaware's student loan repayment program helps to offset this burden.
Artstuffmatters // Wikimedia Commons
- Number of borrowers: 137,300
- Average loan balance per borrower: $39,238
Delaware's average debt per borrower is among the highest in the country; only Georgia, Maryland, and Washington D.C. surpass it. Delaware's student loan repayment program helps to offset this burden.
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What’s a Pell grant? How it affects student loan forgiveness
Daniel Mayer // Wikimedia Commons
- Number of borrowers: 1,641,600
- Average loan balance per borrower: $41,826
In Georgia, 56% of the graduating class of 2020 had student loan debt. The average loan balance per borrower is especially high in the state, considering that 79% of students attended public colleges which are usually less expensive than private colleges.
Daniel Mayer // Wikimedia Commons
- Number of borrowers: 1,641,600
- Average loan balance per borrower: $41,826
In Georgia, 56% of the graduating class of 2020 had student loan debt. The average loan balance per borrower is especially high in the state, considering that 79% of students attended public colleges which are usually less expensive than private colleges.
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What’s a Pell grant? How it affects student loan forgiveness
Bgervais // Wikimedia Commons
- Number of borrowers: 864,700
- Average loan balance per borrower: $42,543
Only Washington D.C. has an average loan balance per borrower higher than Maryland. But the state offers a Loan Debt Relief Tax Credit for borrowers who took out at least $20,000 in loans and have at least $5,000 in debt still outstanding.
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Bgervais // Wikimedia Commons
- Number of borrowers: 864,700
- Average loan balance per borrower: $42,543
Only Washington D.C. has an average loan balance per borrower higher than Maryland. But the state offers a Loan Debt Relief Tax Credit for borrowers who took out at least $20,000 in loans and have at least $5,000 in debt still outstanding.
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What’s a Pell grant? How it affects student loan forgiveness
Daderot // Wikimedia Commons
- Number of borrowers: 125,000
- Average loan balance per borrower: $53,769
The District of Columbia's ombudsman and its Department of Insurance, Securities, and Banking help students minimize their debt. The district's attorney general's office has also compiled a web page of student loan repayment resources. Even so, Washington D.C. borrowers have the highest average loan balance in the country.
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Daderot // Wikimedia Commons
- Number of borrowers: 125,000
- Average loan balance per borrower: $53,769
The District of Columbia's ombudsman and its Department of Insurance, Securities, and Banking help students minimize their debt. The district's attorney general's office has also compiled a web page of student loan repayment resources. Even so, Washington D.C. borrowers have the highest average loan balance in the country.
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4. Borrowers who can’t pay off all their interest each month
Ballooning student loan balances could be a thing of the past.
Under the revised plan, any interest unpaid each month would be covered by the government, so long as the borrower keeps up with their monthly payments. The leftover interest would not accrue.
“The effects on individuals of not seeing their balances go up every month will be extremely beneficial in ways that we’re only starting to understand,” explains Daniel Collier, an assistant professor of higher and adult education at the University of Memphis who researches IDR plans. “It will probably have the greatest psychological impact toward the good on borrowers with high debt loads.”
5. Borrowers of color
On average, Black, Hispanic, American Indian and Alaska Native borrowers would see their lifetime payments per dollar borrowed be 50% of what they would be on the current REPAYE plan, the Department of Education estimates, while white borrowers’ projected lifetime payments per dollar borrowed would be 37% less than they would be on the current REPAYE plan.
Racial income gaps are behind these estimates. Compared to the median income of white households, Hispanic households earn 75%, American Indian and Alaska Native households earn 64%, and Black households earn 61%, according to data from the 2015-2019 U.S. Census.
“Black borrowers borrow the most, they are more likely to borrow and are more likely to struggle with repayment, so things that improve and make student debt more manageable are likely to help the people that are harmed most,” says Victoria Jackson, assistant director of higher education policy at The Education Trust, a nonprofit organization that promotes racial and economic equity in higher education.
Who won’t benefit from the new IDR?
Parents who borrowed to help their kids attend college
Parents who took out federal loans — known as Parent PLUS loans — to help their kid pay for college would be excluded from the revised IDR plan. Currently, these borrowers are only eligible for the least-generous of the four existing IDR options, which is called income-contingent repayment.
“That’s particularly a concern for Black households,” says Tisa Silver Canady, who holds a doctorate in education and is founder of the Maryland Center for Collegiate Financial Wellness. In 2018, 42% percent of Black Parent PLUS borrowers were low-income, compared to 8% of white Parent PLUS borrowers, per The Century Foundation, a left-leaning think tank that studies equity in education, health care and work.
Borrowers with graduate school debt
Borrowers who took out federal loans for graduate school would still see payments shrink, but the boost would be less favorable under the IDR revision than for those with only undergraduate loans.
People with only graduate school loans would still pay 10% of their discretionary income per month, which is the current IDR rate, compared to 5% for those with undergraduate loans. Borrowers with both graduate and undergraduate debt would pay somewhere between 5% and 10%.
How can I sign up?
The revamped IDR plan is not yet available. The Education Department aims to launch it by the end of 2023 — but facing a budget crunch and a long to-do list, that timeline is uncertain.
Federal student loan payments could resume before the revised plan rolls out. Contact your student loan servicer to discuss payment options that are available in the meantime.
Borrowers who are currently enrolled in REPAYE will be automatically transitioned to the revised plan when it’s available. Most other borrowers will need to contact their servicer to sign up.
