When Amanda Snow graduated with a master’s degree in environmental science in 2014, she immediately signed up for an income-based repayment plan to pay off her federal loans.
It took her another three years before she earned the minimum income she needed to start making payments, all while interest was accruing.
So when federal loan payments were suspended in March 2020 at the start of the pandemic, Snow and her husband were left with hundreds of dollars at their disposal each month. It was an experience that revealed a kind of financial freedom and comfort that previously seemed unattainable.
“It was really hard to get used to doing things like, ‘Go to the bakery and make me a treat,’” she said. “We really weren’t able to give birthday and Christmas presents to friends and family, and it really bothered me, so I definitely did last year.”
A college education meant a ticket to a better life, said residents of Sacramento who spoke with The Bee. For many, tolerance opened the door to the lifestyle they first expected. Some spent hundreds on a down payment or a rainy day fund. Others have paid off their credit card debts. Daily shopping has become less stressful.
About one in seven people in Sacramento County has student loan debt, according to credit bureau data analyzed by the Urban Institute. The median student loan debt is around $ 18,000 and the median monthly payments are around $ 140, according to the Urban Institute.
The forbearance was previously scheduled to end in February, but in a last-minute announcement in December, the Biden administration extended the freeze on loan repayments until May. It was a welcome respite for those struggling with thousands of dollars in debt and interest. But it also delayed what many believe to be the inevitable – a repayment of payments and interest, potentially without a student loan forgiveness.
Carl Arana returned to school after losing his job about 10 years ago. A longtime musician, he attended Pinnacle College, a sound engineering school that closed a few years later.
“We got our certificate and the training you paid for,” said Arana, “but it’s not a good mark on your resume to talk about training at an audio school that couldn’t. stay in business. ”
Graduating with about $ 15,000 in debt in 2011, he was able to pay off the balance to about $ 10,000 before the forbearance took effect. its balance completely.
When President Joe Biden ran for office in 2020, he pledged to forgive at least $ 10,000 in student loan debt per person, with the rest of the loans being forgiven after 20 years of payments. But Arana became more and more demoralized that a plan of forgiveness had materialized again.
“You go on with your life without thinking about these payments, but the emails started coming in about six months ago,” he said. “Now that’s something I have to factor into the budget.”
Will canceling student loan help?
Not everyone sees forgiveness plans as a panacea for their financial debt. Like many millennials, Cait Fournier earned her undergraduate degree in 2009 during a crater economy and eventually returned to graduate school, which makes up the bulk of her six-figure debt.
Due to the sheer size of her debt, she always knew that the only way to manage her loans was to find a job that would qualify for the federal public service loan forgiveness program.
She now holds a PSLF-eligible government position and provides mental health care services to underserved residents, a career that she knows serves a vital public good. But she also knows that if she didn’t have to make monthly payments, “a good chunk of that money would go straight back into the economy,” Fournier said.
“We started our adult career already riddled with debt,” Fournier said. “It’s still that ball and chain attached to me.” There’s no way to look at six figure debt and say it’s not holding you back.
Before the recession, Heith Ballin was in the car sales business, raising his eldest daughter with his then wife. When the economy collapsed and the industry became too competitive, he decided to get a college degree. Ballin was determined “to create opportunities where I couldn’t get knocked down like this again,” he said.
After earning an associate’s degree in 2011, he then transferred and graduated from California State University at Sacramento in the summer of 2015 with a degree in Electrical and Electronic Engineering, which left him with more than $ 70,000 in debt.
Now 40, Ballin has since remarried and had two more children. He has a well-paying job, but his anxiety remains high “all the time”. He tries to buy a house, but the market has become more and more impenetrable. The first time his family went on vacation was in December 2019, a trip to Disneyland, “and we sacrificed Christmas for that, we didn’t give any presents,” he said.
“I never thought I would go to college and still not have enough money to afford a house so that my kids could each have a room,” Ballin said. “The quality of my lifestyle does not match my expectations for academic returns. “
Tolerance eased his financial burden somewhat, he said. But in the end, Ballin said he would likely be making even higher monthly payments than before the pandemic.
“I made all of these decisions and I regret it,” Ballin said. “I don’t feel that sense of accomplishment because of the constraints that have been placed on me. “
Jess Milbourn is now widely known by the famous Devil May Care ice cream shop that he runs in downtown Sacramento. But when he graduated from Redlands University in 1999, his initial plan was a career in law.
Finally realizing that he did not have the “temper” for law school, he instead set his sights on culinary school. He can’t remember how much he originally borrowed, he said, but he does know how much debt he has now: around $ 100,000, mostly from his undergraduate studies.
“My thought then was, ‘Of course I’ll be able to pay,’” he said. “But you don’t understand the gravity of what you’re doing. ”
Business is better now, and federal COVID-19 relief money has helped. But Milbourn said foot traffic and spending at the store have yet to regain their pre-pandemic levels. When forbearance ended, he said he would likely continue to skip the $ 200 monthly payments, choosing to prioritize utility bills, mortgage payments and food.
“This is Maslow’s hierarchy of needs, and student loans are not there,” he said. “There is obviously interest and late fees, but when it comes to the consequences (of not paying) utility bills and mortgage payments, they are serious and instantaneous. I get a score on my credit report, but it’s not an immediately felt impact.
As for Snow, she recently suffered a pay cut, but her new job is with the federal government, which makes her loans eligible for forgiveness in about nine years. Still, she feels a sense of hopelessness about herself and her husband’s financial situation. She dreads when payments start again and hundreds of dollars are out of hand each month.
“We will definitely die without our debt,” Snow said of her and her husband’s student loans. “It may be dramatic, but this is how I feel.”
A few weeks ago, the couple picked up an expensive framing project from Michael that they had put off. It was their diplomas, Snow said, a Christmas present that his family ultimately participated in.