BBC Capstone Project Fall 2022

Debt forgiveness provides hope, concerns for students, faculty, and staff
By Bailey Britton

The Biden student loan debt forgiveness plan is currently on pause as a federal appeals court issued an injunction on the policy. Kansas is one of several states suing the federal government over the proposed plan. Kansas State University students and professors still await debt forgiveness, but many have differing opinions.

The plan, if instated, could impact many K-State students.

“It should impact quite a few of our students,” Jodi Kaus, director of Powercat Financial, said. “It won’t impact our new freshmen — it’s not for any student loans that were borrowed this year — but any student loans from last year or before, the student will have to meet the income requirements so not all students will be eligible for the relief, but quite a few will meet those requirements.”

If borrowers meet the income requirements, they could receive up to $20,000 in debt forgiveness.

“Lots of things can change between when the first idea is announced and when the actual, final relief is provided,” Kaus said.

Economics professor Daniel Kuester says that debt relief has pros and cons, just as anything involving the economy.

“​​You can frame it as a good thing or a bad thing in terms of economy,” Kuester said. “I mean, generally, we like people working and all that, obviously, but the timing of it is unfortunate, in terms of how it will be inflationary.”

Right now, the inflation rate in the United States is 7.75%. Kuester said inflation is caused by a number of things, such as supply chain demands and other government stimulus plans, but he is unsure how the debt relief would directly affect the current inflation rate.

“I mean, obviously, people talk about this more on a micro level,” Kuester said. “Some economic activity, it's gonna create probably a few more jobs. That money flows into the economy, but it also would certainly be expected to be inflationary.”

However, Kuester said it’s hard to say exactly what would happen.

“There's a lot of moving parts,” Kuester said.

Kuester said the debt relief plan is a topic of interest at K-State and in higher education in general because of the nature of the plan. However, it is something that comes up in his economics classes.

“It's something we'll talk about more in senior seminar than I will in principles of economics,” Kuester said. “I let them choose a topic and then we spent the last day on that topic. I could just present a card of matter of fact, ‘Here's the cost, here's the potential impact on the economy from both inflation and unemployment perspective,’ things like that.”

Even without the finalized debt relief plan, students are hopeful. Bailey Roberts, senior in animal sciences and industry, said she applied for debt relief even though she doesn’t think she fully qualified.

“I have probably about $3,500 in debt right now,” Roberts said. “I am actually trying to apply for more student loans right now and for the next semester.”

According to The Education Data initiative, the average amount of student loan debt after earning a four-year degree is $34,100. That only considers government student loans, however. Some students take out private loans, which aren’t affected by the proposed debt relief plan.

“We have already one generation that is crippled by debt and then we have the second generation,” Roberts said. “So it was millennials and now Gen Z that is coming up that is going to be crippled as well. The older Gen Z are already starting to feel the effects of it.”

Students can learn more about student loan repayment through the Powercat Financial website. All borrowers can access their loan repayment information through the FAFSA website at StudentAid.gov.