President Joe Biden’s plan to forgive up to $20,000 in federal student loan debt for millions of borrowers across the country could be particularly meaningful for Maine college graduates.
Mainers who graduated from college in 2020 had, on average, the 10th highest student debt load in the country, completing college owing $32,764, according to the Institute for College Access and Success.
Maine had the eighth highest percentage of college graduates that year who completed college with debt, at 63 percent.
Under Biden’s plan, announced Wednesday, borrowers who earn less than $125,000 a year, or families earning less than $250,000, would be eligible for up to $10,000 in loan forgiveness. For recipients of Pell Grants, which are reserved for undergraduates with the most significant financial need, the federal government would cancel up to an additional $10,000 in federal loan debt.
Loan payments would also be capped at 5 percent of monthly income, down from the current 10 percent limit.
Biden is also extending a pandemic-era pause on federal student loan payments for what he called the “final time” through the end of 2022.
The Bangor Daily News spoke to three Maine residents about the president’s plan.
Billy Howell, 21
Billy Howell graduated in May from the University of Maine with a degree in mechanical engineering. Howell, who is from China, Maine, now works at the university’s Advanced Structures and Composites Center.
He walked out of school with a diploma and about $25,000 in federal student loan debt. Under Biden’s plan, that amount would be cut nearly in half, he said.
“Looking at all my loans that I’m going to have to start paying in the next couple of months it seemed manageable, but it would take 10 years to pay them all off,” Howell said. “If this goes through…I could pay them off in six or seven years instead of 10, and [it would] just put me on a better track for bigger purchases, like a home.”
While he and other borrowers were hoping the president would forgive a larger amount of student debt, some money forgiven is better than none, Howell said.
“I was excited when I first heard about the chance to get $10,000 knocked off,” he said, though he added that it’s unfair to receive the benefit just months after completing school, while some who have paid down their student debt over a long period might not benefit as much.
Fiona Nelson, 29
Fiona Nelson was able to complete her undergraduate degree at the State University of New York at Albany without student loans. But she had to take on some debt to pursue her master’s degree in social work, for which she’s enrolled in a program through Boston University.
Nelson, who moved to Bangor last summer from New York and works at a Westbrook-based nonprofit, said Biden’s loan forgiveness plan is a step in the right direction, but she thinks more could be done.
“Initially hearing it, it’s like, you have a moment of excitement. And then you realize, oh, this is good, but it’s not good enough,” she said. “A huge part of it is interest rates, too. So, if anything, I think, you know, the best thing long term would be to cap interest rates.”
The other problem with the plan is that it could exclude people who make $125,000 or more, like her friends who are about to graduate from law or medical school with large amounts of debt and will likely secure jobs with those higher wages, Nelson said.
“I think it’s promising, but, like I said, not nearly enough,” she said. “I think it’s promising and maybe a step in the right direction.”
Philip Mathieu, 27
Philip Mathieu describes himself as a bit of a “boomerang” when it comes to his life in Maine.
He was born in Maine and spent a portion of his early childhood in the state, but his family eventually moved to New Hampshire.
Now, the 27-year-old is back, living in the Portland area as he works on a graduate degree in data science through Northeastern University in Boston.
Mathieu has advocated for an expansion of Maine’s educational opportunity tax credit for college graduates who live and work in Maine.
He said the program has made it easier to afford his student loan payments. Now, he said, under Biden’s plan he’ll be one step closer to being able to afford a house.
“For me, it’s very much putting me $10,000 closer to putting a down payment on a house, especially at a time when the housing market is going crazy,” he said. “That kind of thing can have a huge impact on people.”
Mathieu graduated from Brown University in 2017 with about $40,000 in federal student loan debt. A significant chunk of that debt would vanish under Biden’s plan.
“I’m currently in grad school, and I was doing some career mapping and thinking about what kinds of trade-offs I would be willing to make to be able to afford a house now that it costs quite a bit more, and this kind of thing could really make a difference,” Mathieu said.
Mathieu isn’t just excited about the debt forgiveness for himself. He’s excited about the promise it holds for Mainers across the state.
“One of the things I appreciate about the way that they chose to approach the income limits is, it’s going to mean that a lot of people benefit from this, especially in a state like Maine, where the wages might be a little bit lower than if you were working in Boston or something like that,” he said.