UTAH (ABC4) – President Biden announced that the current hold on federal student loan repayments will be extended until August 31st, while some Democrats remain firm in calling for complete debt forgiveness. This extension and potential debt-wipe could have a profound impact on Utah students and graduates, as well as the local Utah economy as a whole.
After both former President Trump and President Biden both enacted federal loan payment pauses during the COVID-19 crisis, a broader conversation about the price of attending college in the U.S. began. Many members of the U.S. House and Senate have pressured President Biden further, arguing that a cancellation of student debt “will provide long-term benefits to individuals and the economy” nationwide.
Tuition costs in Utah averaged at about $4,373 for in-state tuition and $15,240 for out-of-state tuition, which is slightly lower than similar national averages according to College Tuition Compare. This average, however, is calculated across all universities in Utah, which vary in price greatly. For example, current tuition at The University of Utah for out of state students approaches a whopping $30,000, while Brigham Young University in Provo charges a flat rate of slightly over $6,000 at most, complicating the question of just how much debt forgiveness or loan payment delays might benefit Utahns and students from out of state.
Average student debt for Utahns comes in at around $32,000 compared to a national average of about $39,000. Federal student loans account for 92% of all U.S. student debt, compared to about 7.5% of debt being owned by private lenders.
A look at the raw averages of debt may indicate that Utahns might benefit less on average from debt forgiveness or payment extension than the average American with student loan debt. However, this conclusion is complicated by the average Utah college graduate’s salary — $38,500 compared to a national average of $43,500. This means that while Utah graduates may have less debt overall, they are paying it off slower than most Americans.
Using this average data for a ten year payment calculation, this means that Utah graduates with debt are paying on average $319 monthly, with a total interest of over $6,000 above their total loan balance.
Proponents of student loan delays and forgiveness argue the move not only provides temporary COVID-19 financial relief, but allows folks to save for larger capital-earning investments such as retirement and home ownership. Whether or not it will do enough to combat rapid inflation and extreme Utah housing costs is difficult to predict.
Critics of proposed student loan forgiveness argue the impact of such policies will contribute to an already ballooning national debt crisis. Others say universities themselves should be accountable for low post-graduate income, instead of the federal government.
As of now, the conversation at the federal level of governance remains somewhat stymied. Whether federal loan payments will be delayed again approaching August 2022 or forgiven altogether remains to be discussed in a meaningful way.