Although the federal Office of Management and Budget is predicting a decline in the deficit of $1.7 trillion, the single largest decline in history, debate over the merits of the Biden Administration’s Student Debt Relief Plan continue.
But for NH businesses starved for workers, anything that might help stem the flow of college students out of state is worth a second look. Departing students often cite the lack of affordable housing as a driver. Add on a higher-than-average debt load and the motivation to relocate is even greater.
According to Brian Gottlob, principal at PolEcon Research in Dover, there were 189,100 NH residents with a balance totaling $6.55 billion remaining on their federal student loans as of March.
Relief is in sight for some as the Biden plan allows up to $10,000 in student loans to be erased for borrowers making up to $125,000, or married couples up to $250,000. Pell Grant recipients in low- and middle-income families are eligible for $20,000 in student loan debt cancellation.
Without entering the debate on the merits of the plan, Gottlob says with 30% of borrowers in NH having a balance of $10,000 or less and 51% having a balance of $20,000 or less, a high percentage of those borrowers could see all of their student loan debt forgiven.
Without full details about the borrowers, a precise estimate of how much of the $6.55 billion of debt could be forgiven is difficult. Using some simplifying assumptions, Gottlob says a reasonable estimate is somewhere between $2.03 billion to $2.38 billion.
One of the things he found most surprising was that 16% of NH residents with student debt are ages 50 and older, and they owe just under 25% of the total balance owed by NH residents. This is likely attributable to the inclusion of “Parent Plus” loans (which can also be forgiven) taken by parents to fund their children’s education.
While 30% of borrowers will have all their debt forgiven, 10% of borrowers have balances of $80,000 or more, and collectively they owe 43% of the debt owed by NH residents and will have a much lower percentage of their debt forgiven, adds Gottlob.
Gottlob points out that debt owed by NH residents doesn’t necessarily come from attending NH colleges and universities.
In addition, several schools in the state, including Dartmouth and Southern NH University, are pledging to reduce or eliminate student debt.