Debt Lurks For Many Graduating NJ College Students, Advocates Say

NEWARK, NJ — There’s a dark cloud lurking over college graduation season in New Jersey, advocates say: student loan debt.

In New Jersey, the average student loan balance per person tops $40,000. An estimated 1.3 million people are trapped underneath $48.8 billion in debt. And with an average monthly payment of $310, many people who want a college education are forced to put off buying a home or starting a business to pay back their loans.

But there’s a solution to one of the 21st century’s greatest financial struggles, advocates say.

As New Jersey prepares to celebrate hundreds of high school and college graduations this spring, lawmakers and social justice groups continue to demand a “cancellation” of student debt, both in the Garden State and across the nation.

“It’s graduation season, which means today would be a great day for President Joe Biden to #CancelStudentDebt,” Sen. Robert Menendez wrote Sunday.

Menendez and his fellow U.S senator from New Jersey, Cory Booker, have supported the elimination of up to $50,000 in student debt for each loan holder. Earlier this year, the lawmakers said that President Joe Biden has the power to cancel millions of loans by using his existing authority under the Higher Education Act.

While on the campaign trail, Biden said he supported canceling $10,000 in student loan debt per borrower as a way to stimulate the economy.

• See related article: Biden Has Power To Nix Student Debt For Millions, NJ Senators Say
• See related article: Push For Biden To 'Cancel Student Debt' Continues In New Jersey

Would forgiving student loans have a positive effect on the economy? It depends on who you ask.

A 2018 paper from the Levy Economic Institute of Bard College looked at the effects of student loan debt forgiveness. At the time, authors wrote that a one-time cancellation of $1.4 trillion in outstanding student debt would translate to an increase of $86 billion to $108 billion a year, on average, to the country's GDP.

However, the bipartisan Committee for a Responsible Federal Budget argues that canceling student loan debt would be a poor stimulus to the economy. Researchers say that while student loan forgiveness would increase cash flow by $90 billion per year, it would come at a cost of $1.5 trillion.

'REPAIRING THE CRACKS'

The renewed push to cancel student debt has gained an extra urgency due to the coronavirus pandemic, according to the Newark-based New Jersey Institute for Social Justice (NJISJ).

“As we emerge from a challenging year that exposed the cracks of structural racism in our foundation, we must work to ensure that the ‘new normal’ is not the same as the ‘old normal,’” the NJISJ recently said.

“We must repair the cracks and build a stronger foundation,” the group continued. “A key part of that is to build opportunity for young people of color for whom post-secondary education is often more of a burden than an opportunity due to overwhelming student debt.”

“We can’t begin to solve this problem until we have transparency and accountability on student loan and employment outcomes in our state,” the NJISJ said.

As such, the group and New Jersey Citizen Action are partnering to push two bills in the New Jersey Legislature:

• A5391/S2026 would require state agencies to collect data from post-secondary schools on students’ debt and income that could be used to establish state-wide "gainful employment" standards that would hold schools accountable for ensuring students are not overburdened with debt compared to future earnings potential
• A5380/S3683 would require colleges and universities to provide targeted data on student loan outcomes broken down by race, ethnicity, age, income, gender and first-generation status that would help identify where reforms are needed to protect students and borrowers of color

Despite supporters’ claims, there is some heavy pushback to the concept of canceling student loan debt in New Jersey. Responses to Menendez’s recent social media post included:

• “Free, free, free … Taxed on to the backs of an already overburdened [population]?
• “Do you mean use tax dollars to pay off student debt? Debt isn’t wiped away.”
• “Forgive the interest, pay the loan.”
• “I’m sorry but if you take out a loan you are responsible for paying it back. I see no issues with reducing interest rates though. Something does need to be done to make higher education more affordable.”
• “Pay the debts that you signed up for! I don't like my mortgage and taxes but I certainly pay them on time! Why should taxpayers pay off somebody else's loans. pay your own way or don't go into debt.”

But other New Jersey residents are embracing the idea with open arms.

“Crazy how we consider education to be one of the things people don’t want their tax money to go towards,” a commenter wrote. “Should be a top priority.”

• See related article: These NJ Accountants Say Student Debt Is A 'Financial Crisis'
• See related article: Student Loan Default Rate For New Jersey Revealed

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