By Ford Turner
The Morning Call
Given their status as a national leader with an average of $37,061 owed per graduate, Pennsylvanians have a clearer view into the black hole of student debt than just about any group in the U.S. Many, including lawmakers in Harrisburg, do not like what they see.
“You hear stories of kids coming out of college paying $1,000 a month in loan payments,” said Rep. Steve Samuelson, a Northampton County Democrat. “It is crushing our young people. It is an issue we have to address.”
Two lawmakers new to the Legislature this year, 30-year-old Rep. Jennifer O’Mara and 33-year-old Rep. Meghan Schroeder, have created an informal group to hash out the issue.
While plenty of bills that approach the issue from various angles? proposing tactics like tax credits, limited forgiveness and refinancing? already are awaiting action in Harrisburg, 32 lawmakers have joined the O’Mara-Schroeder “Student Debt Caucus.”
O’Mara, a Delaware County Democrat, and Schroeder, a Bucks County Republican, hope for a deep dive that will result in a package of legislation.
Their work comes as data and events paint an ugly picture for Pennsylvania. State residents have $68 billion in student debt, and the $37,061 average debt per borrower is the second-highest in the nation. More than 25% of Pennsylvania borrowers are seriously delinquent on repayment, or in default. The data-driven website lendedu.com put out a 2018 list of public colleges nationwide with the highest average student debt, and Pennsylvania schools held 15 of the top 20 positions.
A lawsuit alleging mismanagement of a repayment program recently was filed by the New York state attorney general against the Pennsylvania Higher Education Assistance Agency. And surging numbers of Pennsylvania grandparents have student debt.
Jonathan Frampton of Emmaus is 36 and worries about financing the education of his 12-year-old daughter.
“We make education the most important goal in life. We are constantly putting that in the ears of our children,” Frampton said. “But to be successful, you actually have to dig your own grave and climb back out.”
Financial literacy an issue
The Student Debt Caucus held its first meeting earlier this year.
“I want to hear more from people who have student debt,” said O’Mara, who graduated from West Chester University and is still paying off her own loans.
Schroeder has paid off her loans. She called student debt levels “alarming” and said young adults should not have to live in family basements.
Both she and O’Mara think young adults need to become more savvy financially.
“They are unsure of what they are doing when they take out loans and they are making mistakes from the very beginning,” O’Mara said.
But there is widespread belief that statewide systemic problems have dramatically worsened the situation.
The most-mentioned cause is state underfunding of higher education. Data from the Pennsylvania State System of Higher Education, whose 14 schools include Kutztown, Bloomsburg, East Stroudsburg and West Chester universities, showed that while tuition increased 40% in a recent 10-year stretch, state funding to the system dropped by 5%.
Other signs point to national problems in the student loan system itself.
In November 2017, Pennsylvania Attorney General Josh Shapiro sued Navient, a publicly traded Delaware company that services student loans, claiming it steered borrowers into repayment options that cost them more in interest than they would have paid if Navient has advised them of all their repayment options.
A statement on Navient’s website says the claims by Shapiro, and those made by other state attorneys general in separate lawsuits, are unfounded.
“We will vigorously defend our record in court and are confident we will prevail following a review of the facts,” the statement said.
More recently, New York state Attorney General Letitia James sued the Pennsylvania Higher Education Assistance Agency, or PHEAA, one of the nation’s largest student loan servicers. James accused PHEAA of failing to properly administer the Public Service Loan Forgiveness Program, which forgives the loans of student borrowers who have made qualifying loan payments while working in public service for 10 years. The agency’s practices, she said, were “deceptive, unfair and abusive.”
PHEAA spokesman Keith New said the agency could not comment on the litigation. He noted PHEAA handled loans under contract to the U.S. Department of Education and by Congress and the department.
Shapiro, speaking recently to reporters and editors at The Morning Call, called the overall situation “a real student debt crisis.”
According to data from The College Board, average tuition and fees at the nation’s four-year private schools increased by 43% in the 10 school years ending in 2019-2020, to $36,880. The corresponding figure for four-year public schools increased by 48%, to $10,440.
During the same period, a government measure of consumer prices increased about 19%.
A top federal student loan official who resigned last month, A. Wayne Johnson, called the student loan system “fundamentally broken” and the loan situation “an abomination that’s in plain sight,” according to media reports.
Democrats in the U.S. House, including Susan Wild, who represents the Lehigh Valley, are working on a broad higher-education bill that among many other things would boost the size of Pell grants, a federal aid program based solely on financial need, and offer states incentives to make community college programs tuition-free.
Wild authored another provision of the bill that would streamline the array of student loan repayment programs, aiming to make it easier and more affordable to repay those loans.
Public feels the pain
Pat and Susan Glovas of Forks Township have three children who took out loans to get through college.
Their own financial acumen, accumulated over decades of experience, allowed them to help guide their children, two of whom still are paying their loans.
Nonetheless, they co-signed loans for two of the children and borrowed $15,000 themselves to help the third.
“Why are there so many elderly over-60 people who have outstanding debts?” Pat Glovas said. “Well, when they know that a 14% interest rate is the best loan your child can be offered, the only way to get it down is to co-sign for them.”
Lisa Whitcomb of Alburtis, who is 55, has a daughter still paying off her student loans.
“I think college in general is way too expensive,” Whitcomb said. “It is making it really unaffordable for the middle class, or what little middle class is left. And that is going to be a problem for the country down the road.”
Others see Pennsylvanian’s big debt load in a different light.
Bobby Henning of Montgomery County has two children who are nowhere near college age. But he and his wife, Jessica, believe borrowers should be responsible for their actions.
Instead of going deep into debt for an education that may not have a clear link to a financially solid career, in their view, young adults should consider alternatives to college. Henning said, “There is no failure in going and being an electrician or going and being a plumber.”
Ideas on table
Stephen Herzenberg, executive director the Keystone Research Center, said the General Assembly has not been able to fix the Pennsylvania debt problem because its leaders are too focused on cutting taxes.
Nonetheless, plenty of bills already filed in Harrisburg seek to attack Pennsylvania’s problem in various ways. They include:
A bill crafted by Philadelphia Democrat Sen. Vincent Hughes would allow for issuance of a bond of up to $1 billion to allow borrowers with high-interest loans to refinance them, create $500 credits toward state personal income taxes for people paying student loans, and encourage employers to help workers pay off student debt. Hughes previously introduced a proposal ? one that has been stalled in a committee ? that would cover tuition and fees for Pennsylvania high school graduates who attend any of the state’s community colleges or state-related or state-owned universities and have a family income of $110,000 a year or less.
Rep. MaryLouise Isaacson, a Philadelphia Democrat, wants to provide annual state tax credits of up to $2,500 per individual for interest paid on student loans for individuals making up to $75,000 and couples making up to $155,000.
A narrowly focused bill that passed the House and is awaiting action in a Senate committee, sponsored by Lawrence County Democrat Chris Sainato, calls for forgiving student loans of up to $16,000 for members of emergency medical services agencies, volunteer fire companies or volunteer rescue companies after four years of service.
Isaacson said attacking the problem will allow more people to “spend money and buy houses and not just be paying back banks.”