EVERETT — Kira Violette went to Cornish College of the Arts to pursue her passion of graphic design. She now works at Everett Community College as a graphic designer.
She said she has always spent a lot of time drawing and thought being able to design clothes, album covers, posters and more was a perfect fit for her future.
After she graduated in 2019, she faced a $35,000 student loan bill.
Violette is grateful for her degree, but she isn’t looking forward to paying back her loans $400 a month at a time. She is one of more than 800,000 people statewide who will resume paying federal student loans this month after a three-year pause during the pandemic.
Since March 2020, borrowers haven’t had to pay or worry about accruing interest.
State Rep. April Berg, D-Mill Creek, said the pause has given college graduates time to have more freedom with their money. But since the pause began, Berg has seen big changes in the economy, particularly rent increases.
“We’ve seen housing go up exponentially, so this has really given borrowers a chance to breathe,” Berg said.
Violette will now have to adjust her monthly budget.
“I don’t tend to spend too much money on myself outside of necessities, but I feel like I’m going to have to cut that down even more,” she said.
When people have extra monthly payments to make, they can’t spend as much on local businesses that matter to the community, Berg noted.
“When we talk about hitting pause on that loan repayment, it didn’t just help the borrowers, it helped the entire economy, because it meant more spending power went directly to the places we care about,” she said.
Berg supports complete loan forgiveness.
In June, the Biden administration announced a plan to cancel up to $400 billion in student loans — with many expecting $10,000 or $20,000 in debt forgiveness.
But before the relief could kick in, the U.S. Supreme Court struck down the program, ruling the president overstepped his authority.
On Wednesday, Biden announced another move to cancel $9 billion in student loans for 125,000 borrowers. The aid was directed toward public service workers, people enrolled in the income-driven repayment plan and borrowers with disabilities.
The state can’t do much to help with federal student loans, Berg said. She argued lawmakers can still be aware of the financial burden debtors have, and use that to shape economic policy.
On Friday, state Attorney General Bob Ferguson, joined by 17 other attorney generals, sent a letter to the U.S. Department of Education asking for more protections for borrowers. Current and former students are facing “unprecedented challenges” in figuring out how and when to pay their loans, the letter states.
Since the pause, several loan servicers, including Navient and Granite State, have left the market. This led to a transfer in more than 30 million accounts to other loan companies.
“We know from experience that servicing transfers create a high risk of servicing errors,” the letter notes.
Lost paperwork, incorrect records and delays in communication were regularly reported in transfers even before the pause began.
Violette found it difficult to get help from her loan servicer in deferring the loans another year.
“I kind of had to learn how to do it on my own,” she said.
Everett Community College President Chemene Crawford wants the college’s financial aid department to add advisers to help students understand their finances and how much college costs. Currently, the college doesn’t have any advisers dedicated to financial literacy.
She sees community college as “the best deal in town,” offering quality education at a fraction of the price of four-year universities.
In the 2022-2023 academic year, 293 students took out federal Direct Stafford loans, averaging $5,727. In the same year, 1,410 students received federal Pell Grants, need-based financial aid that does not need to be paid back.
Everett Community College’s average cost of in-state tuition in 2023-2024 is $4,533. In comparison, the University of Washington’s is $12,645.
To make sure your student loans are being paid on time, find out who your servicer is through StudentAid.gov. There, you can set up automatic payments and pay your first bill before the due date.
Jenelle Baumbach: 360-352-8623; jenelle.baumbach@heraldnet.com; Twitter: @jenelleclar.
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