(The Center Square) – As Pennsylvania higher education institutions face a shortage of students, their former students will disproportionately benefit from student loan forgiveness.
A research brief from the Independent Fiscal Office estimates that almost two million Pennsylvania borrowers hold $69 billion student loan debt, and $21 billion would be forgiven. Another $1.8 billion would be forgiven through the expansion of the income-driven repayment program.
The commonwealth stands out in having more student debt than other states. Pennsylvania ranks 6th in total loan balances, the report noted, and 21st in average balance ($35,300).
Nationally, the report estimates about $469 billion in loans will be forgiven. However, costs could go up if income-driven repayment is expanded. IDR caps a borrower’s monthly payments related to their income and results in loan forgiveness after 20 to 25 years.
While Pennsylvania would see a significant percentage of loan debt forgiven, the benefits favor the middle and upper classes. About 65 percent of loan forgiveness benefits would go to borrowers earning more than $51,000.
The pause on student loan repayments, delayed for the seventh time, will cost the federal government $155 billion and is “extremely regressive,” according to the Committee for a Responsible Federal Budget, with the benefits going to the wealthy.
“The pause disproportionately benefits borrowers in higher-paid professions because people in those professions tend to borrow more,” the CRFB noted.
While student debt in Pennsylvania runs higher than in other states, the bigger issue for the state’s higher education system is attracting students, as The Center Square previously reported.
The State System of Higher Education has lost more than 20 percent of its students compared to a decade ago and combined institutions in response. In the latest state budget, it saw a significant funding increase to support a plan to attract more students and shore up the system.
Anthony Hennen is a reporter for The Center Square. Previously, he worked for Philadelphia Weekly and the James G. Martin Center for Academic Renewal. He is managing editor of Expatalachians, a journalism project focused on the Appalachian region.
This article was republished with permission from The Center Square.