On Monday, Connecticut lawmakers highlighted a state student loan forgiveness program amid expected changes at the federal level.
The Trump administration announced last week that, after five years, the federal government will resume collections on defaulted student loans.
“American taxpayers will no longer be forced to serve as collateral for irresponsible student loan policies,” U.S. Secretary of Education Linda McMahon said in a statement. “The Biden administration misled borrowers: the Executive Branch does not have the constitutional authority to wipe debt away, nor do the loan balances simply disappear. Hundreds of billions have already been transferred to taxpayers.”
Nationally, the DOE estimates 10 million borrowers could default in coming months. In total, more than 42 million borrowers owe more than $1.6 trillion in student debt.
A borrower is considered in default when their payment is 270 days late. The end of the Biden-era pause on collection of defaults means that payments will soon be taken out of tax refunds, social security benefits, and, later this summer, wages.
State Representative Eleni Kavros DeGraw (D-Avon) said the decision would hurt Connecticut residents struggling to pay their debt.
“I just want to remind everyone that when we're talking about this debt relief that is now being canceled, we have bailed out the airline industry more than once. We have bailed out automakers more than once. We have consistently bailed out corporations, oil companies, over and over.”
Fibr-hundred thousand Connecticut residents have student debt, with the average person owing $35,000.
One of them is Central Connecticut State University professor Christina Barmon.
“I am 54 years old. I am still paying off my student loans,” Barmon said. “Those of us who have student loans right now are dealing with a lot of chaos and fear. Income-based payment plans are all of a sudden beyond the ability to pay with our income, and they disappear and reappear from the website; we find out about new rules, plans, and litigation through social media.”
Connecticut state lawmakers said they hope to ease the financial burden with the state’s recently launched student loan forgiveness program.
The first-in-the-nation program was funded by $6 million and passed through the legislature with bipartisan support. It offers up to $5,000 a year for four years to students who studied and now work in the state and meet a list of other financial requirements.
“Not only is this a retention bill to keep people in Connecticut, it is an economic participation bill,” Kavros Degraw said. “We want people to start families here. We want people to buy homes here. We want people to be able to live lives without the stress of this debt weighing on them.”
Applications for the first round closed on March 31, but lawmakers said they hope to secure additional funding to keep the program open.
