30-year-old with $110,000 student debt wanted PSLF; The balance keeps growing

• Kjerstin Laine, 30, owes more than $110,000 in student debt to undergraduate and graduate programs.
• Laine’s career in the nonprofit sector, in theory, offers a path to forgiveness.
• But the interest means she barely paid it, and Biden’s pardon is just a drop in the bucket.

Like millions of student borrowers, Kjerstin Laine is in loan relief limbo.

For Laine, a 30-year-old woman who has more than $110,000 in student debt, the $20,000 forgiveness she’s about to get from President Joe Biden’s plan is just a straw of water in the ocean. As a first-generation college student whose debt has shaped the trajectory of her career, she fears her balance will swell even further after pandemic-era payment pauses end and interest will start to rise again. accumulate.

“I never miss a payment, always on time, and yet my balances never go down,” Laine told Insider. “I don’t understand how people can’t see that there is something wrong with this photo.”

Although she worked in college and took steps to cut costs, Laine graduated in 2014 with a total debt of $98,000 from her undergraduate and graduate studies. Over the next eight years, accrued interest brought his balance down to what it is today, despite his constant repayment.

Laine chose her job in communications for an education advocacy nonprofit because it was a good fit with her skill set — and because it could set her up for public service loan forgiveness, which cancels student debt for government and nonprofit workers after 10 years of qualifying payments.

But that program has always been riddled with flaws, and she recently interrupted that strategy to take a job at a marketing agency with a salary that brings her much closer to the $90,000 the federal government estimated she should be earning. a year to pay it back. debt. It also pays off medical debt.

“I also had to leave the nonprofit sector to get close to it, obviously,” she said. “So that’s how it is Catch-22.”

Laine is one of many millions of American borrowers stuck in an untenable situation. She’s grateful for the relief she’s about to get — though the legality of Biden’s pardon is still under scrutiny — but isn’t sure she’ll be able to afford the monthly payments when they come up. will restart in January.

His situation highlights the larger structural issues underlying the student debt crisis, where first-generation, low-income students take on huge debts to advance and increase their incomes, but still find themselves buried under ever-increasing sales. Many, like Laine, have shaped their lives around the hope of help – now that it’s there in one form or another, it may not be enough.

“The hard part is that I trusted this system that I was told from a young age was going to be my path to prosperity or a decent life – nothing exorbitant – but a decent middle class life where I could give back to the community that helped raise me and supported me through education programs, meal programs, etc.” Laine said. “And it looks like that’s a big broken promise now.”

Interest on student loans can balloon, which means balances aren’t going down — and could be going up

As a college student in California, Laine worked multiple jobs at places like restaurants and grocery stores. She took classes at her local community college and university in the summer and winter to try to keep her expenses down. She graduated in 2012, a semester early to cut costs, racking up nearly $18,000 in total debt for her undergraduate degree in journalism.

She went to a “dream school” for a master’s degree in journalism, still working part-time and coming away with an additional $80,000 in debt in 2014. Upon graduation, she was hospitalized with dehydration after saying that she had run. tattered.

Despite steady payments, the years since graduation have seen Laine’s debt mount. It boils down to the issue of capitalization of interest, which is when accrued interest adds to a borrower’s principal balance and can lead to much more indebtedness than was originally borrowed.

The Biden administration has taken steps to prevent capitalization of interest. In July, it released a proposal to end the practice in all cases not required under the Higher Education Act, such as abstention periods, but those changes will not be implemented. work before next year. And borrowers are still struggling to stay on top of their payments.

For borrowers like Laine, interest in a few years could negate any Biden relief she received.

“I was paying $300 until the pandemic hit. I was paying $300 a month, I think, for three to four years, and my balances never went down,” she said. “They were still going up.”

Officials like Laine can get their debts forgiven, but many can’t even get in touch with their loan officer

Although Laine is a big supporter of the cancellation of civil service loans, she said she “has been plagued by her own problems”.

The company that handles the entire civil service loan forgiveness portfolio – MOHELA – is not making it easy. After a number of loan companies terminated their federal contracts last year, all borrowers enrolled in the PSLF were transferred to MOHELA, and the process was not seamless.

Insider has already spoken with two borrowers who wanted simple questions answered about their PSLF payments, but ended up spending hours on the phone and never even being connected with a representative who could answer their questions.

“I’m really concerned about MOHELA as a total fixer,” Laine said.

Although MOHELA has never commented on the hour-long wait times, Scott Buchanan, executive director of the Student Loan Servicing Alliance — a group that represents federal loan officers — previously told Insider that the Department of Education used to decide how many resources it gives to loan companies, which affects how many customer support employees they can hire.

But with the PSLF waiver expiring on Monday, which allows previous payments, including those previously deemed ineligible, to count toward forgiveness progress, borrowers are pressed for time to access the expanded relief. The department recently introduced permanent PSLF fixes after the waiver expires, but that doesn’t eliminate the confusion some borrowers may be having with their payment history.

“I would love nothing more than to be able to dedicate my entire career to serving this industry,” Laine said. “All of my career choices are sort of centered around that debt, and it’s a really tough and not fun place to be.”