Pennsylvania Student Loan Forgiveness Favors the Rich | State
(The Center Square) — As Pennsylvania’s colleges face a student shortage, their alumni will benefit disproportionately from student loan forgiveness.
A research paper of the Independent Fiscal Office estimates that nearly 2 million borrowers in Pennsylvania hold $69 billion in student loan debt and $21 billion would be forgiven. Another $1.8 billion would be forfeited through the expansion of the income-tested reimbursement program.
The Commonwealth stands out by having more student debt than other states. Pennsylvania ranks 6th in total loan balance, the report notes, and 21st in average balance ($35,300).
Nationally, the report estimates that about $469 billion in loans will be forgiven. However, costs could increase if income-tested reimbursement is expanded. The IDR caps a borrower’s monthly payments based on their income and results in loan forgiveness after 20 to 25 years.
While Pennsylvania would see a significant percentage of loan debt forgiven, the benefits favor the middle and upper classes. About 65% of loan forgiveness benefits would go to borrowers earning more than $51,000.
The pause in student loan repayments, delayed for the seventh time, will cost the federal government $155 billion and is “extremely regressive.” according the Committee for a Responsible Federal Budget, whose profits go to the wealthy.
“The pause disproportionately benefits borrowers in higher-paying occupations, as people in those occupations tend to borrow more,” the CRFB noted.
While student debt in Pennsylvania is higher than in other states, the biggest problem for the state’s higher education system is attracting students, as The Center Square Previously reported.
The public higher education system has lost more than 20% of its students compared to ten years ago and the institutions combined have responded. In the last state budget, he saw a significant increase in funding to support a plan to attract more students and strengthen the system.