Analysis & Comment

Opinion | I’ve Spent $60,000 to Pay Back Student Loans and Owe More Than Before I Began

I have a secret shame: I am 38 years old and I carry enormous federal student loan debt, 12 years after finishing grad school. The CARES Act was supposed to help me. It didn’t.

The interest on my federal student loans is over $700 each month. When the CARES (Coronavirus Aid, Relief, and Economic Security) Act passed, in March 2020, I was thrilled: the government was waiving student loan interest because of the pandemic’s financial burden. I planned to continue to pay the same amount but put it toward the principal, rather than the bank. By September 2020, I calculated, I’d be able to pay my loan balance down by almost $5,000.

But when I logged into my student loan account on April 1, I saw $731.36 in interest was still due. When the payment was deducted from my bank account my principal didn’t budge. And so I have continued to bleed cash to interest rates with no hope for relief.

I am not alone. Millions of other federal student loan borrowers like me also didn’t qualify for the CARES Act. Why?

When the student loan program was first widely available to students it was through the Family Federal Education Loans (FFEL) program, which began more than half a century ago. With that, private banks got into the student loan business, disbursing federal loans on behalf of the government.

It was this FFEL program that millions of teenagers and young adults like myself walked into.

As valedictorian of my senior class, I won substantial academic scholarships. But I needed loans to pad out my last two years of undergrad and to cover living expenses at graduate school.

When I finished school in 2007 — with an undergraduate degree in biology and a masters in science journalism — I owed $78,060 in federal loans. I was actually relieved: my loans were below $100,000, a number that seemed like the line between manageable and unmanageable debt. And the debt was federal, which — as friends and guidance counselors assured me — was so-called “good” debt, where one would get better interest rates and more repayment support, and experience less predatory practices than with private loans. With them I catapulted out of my small Ohio town into a dream career in science journalism.

I went to work as a freelance reporter earning just enough to keep the lights on. For three years, the maximum number allowed, I used economic hardship deferments. In 2010, I started monthly payments on some of my federal loans (I had 16 in all), while also paying off some private ones. But I just couldn’t get on top of them, even though I lived with roommates and, eventually, left freelancing for a full-time gig. The work was great — I spent my days reporting about science and producing live science events; I even met Stephen Hawking!— but, like most beginner journalism jobs, it didn’t pay much. Plus some of my federal loans had interest rates as high as 8.55 percent. I began to flail.

Sallie Mae, my main loan provider at the time, suggested forbearance: That meant my loan payments would temporarily be suspended without going into default. The accrued interest would be added to my principal. It sounded like a reprieve. It was actually a trap.

And so, my principal grew. That forced my minimum monthly payment higher. Sometimes I’d attempt to pay for a few months, then get snowed under and go back into forbearance. Jobs with higher salaries at my level didn’t materialize, so I got thrifty: I borrowed rather than bought a laptop and recording equipment. I opted for free furniture and didn’t buy a car. I picked up additional reporting gigs for extra cash.

Many nights, the growing debt paced the edges of my consciousness, keeping me awake. At the same time, I knew all the career success I’ve ever had has been a direct result of my education and the loans that enabled it.

I continued to pay what loans I could, and for the rest, forbearance. Today, more than 12 years after my last day of school, I’ve paid $60,000 toward $78,000 of loans. Somehow, I am now $100,000 in debt.

And yet I was ineligible for the CARES Act.

It turns out in 2010, in the wake of the housing crisis and recession, Congress decided private banks should no longer be in the federal student loan business and ended FFEL.

From that point on, federal student loans were to be held only by the federal government, and private student loans would continue to be held by private banks, for all new loan applicants. But for those — like me — who still held those FFEL loans which are held by private lenders but backed by the Department of Education, the federal government decided to buy some of these loans from the commercial lenders. But they didn’t buy them all.

I like to call them Goldilocks loans — not quite federal, not quite private, not quite right.

Some six million Goldilocks loan holders like me exist in a sort of limbo. Our loans are still listed as federal, so Congress sets the interest rates and we can’t negotiate. But because they are held privately, we don’t qualify for federal relief, like the CARES Act.

I have watched friends buy cars, houses, stocks. Meanwhile every decision I make — what job to take, what raise to negotiate, what gifts to buy, what apartment to rent, when to tell whomever I’m dating about my debt, whether or not I can ever buy a piece of property, even if I should buy a new chair — is limited by this debt.

If I had qualified for the CARES act, now extended through September 2021, I would have been able to pay my principal down by more than $12,000.

The Biden administration should include the millions of us with Goldilocks federal student loans in the CARES Act. Honestly, they should include these loans in any federal loan program. Even better, they should buy them back from the banks.

Until then, us Goldilocksers are caught in a loophole, with no help in sight.

Molly Webster is a writer and science reporter. She is the senior correspondent at WNYC’s Radiolab.

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