As Supreme Court Considers Student Loan Forgiveness, States May Expand Their Programs

Mar. 13—As the U.S. Supreme Court mulls the constitutionality of President Joe Biden's broad student loan forgiveness plan, lawmakers in many states are looking to expand their own student debt repayment programs.

Every state but North Dakota has at least one loan forgiveness plan. The catch is that most of the 129 state plans are tailored to just a single industry or profession — such as doctors, teachers, police officers or farmers. Or the plans are targeted to people who agree to work in places with a dire need for their services.

Maine, for example, awards forgivable loans to high school, college or graduate students who are state residents and intend to become teachers — but recipients must repay the money, with interest, if they end up working out of state. California has a loan repayment program for physicians, dentists, nurse practitioners and other health care providers who agree to practice in areas with a shortage of those professionals.

In contrast, Biden's plan would provide loan forgiveness of up to $20,000 for any individual borrower making less than $125,000.

But the same factors driving Biden's plan — namely, the fast-rising cost of higher education and the mountain of debt Americans have accumulated to pay for it — are spurring many states to consider expanding their plans. At least two dozen bills are moving through legislatures this spring.

Nearly 44 million borrowers owe a total of $1.6 trillion in federal student loan debt, an average of $37,574 per person, according to the Education Data Initiative, an education research group.

"I think there's been a lot of pressure, over the past five or 10 years, for states to step in due to the weight of student debt," said Adam Minsky, a Boston lawyer whose practice is devoted to helping student loan borrowers. "If the [Supreme] Court strikes down [Biden's] initiative, it would add pressure for states to step in."

Minsky said he doesn't think a ruling that strikes down Biden's program would adversely affect state programs, largely because the state plans are so narrowly tailored. The legal challenge to Biden's order revolves around a post-9/11 law that gives the secretary of education the power to forgive the student loans of borrowers affected by a war or a national emergency.

The plaintiffs, six Republican attorneys general, are challenging the Biden administration's argument that the COVID-19 pandemic was a qualifying emergency.

Minsky, who also is the author of a handbook on student loans aimed at lawyers and law students, said it's unlikely any state would adopt a broad plan like Biden's, mostly because of the open-ended cost.

State programs, including the ones under consideration by legislatures this year, generally are capped.

Georgia lawmakers are considering at least four bills, including one that would repay loans for college graduates who become law enforcement officers.

Republican state Sen. Bo Hatchett said he introduced that bill on behalf of GOP Gov. Brian Kemp, who included the plan in his budget. Both the House and Senate have passed versions of the legislation, and as soon as one chamber passes the other's bill, it will be sent to Kemp for his signature.

"Law enforcement officers are critical to the state, but often they are faced with seeking other careers to pay off their loans," Hatchett said in a phone interview. The bills would allocate $3.2 million to fund loan repayment for up to 800 officers, up to $20,000 per officer, in exchange for five years of service in a law enforcement role in Georgia.

He said the program will be open — first come, first served — regardless of what major the officers' degree is in.

"Across the state of Georgia and across the country, we're seeing a shortage of law enforcement officers," he said, "who are critical to protecting the citizens of the state and who are heeding the call of public service."

Kemp is one of 22 Republican governors who signed a letter opposing Biden's student loan forgiveness plan. In an email to Stateline, Kemp's spokesperson, Garrison Douglas, said there is no comparison, since Biden's plan was "formed by executive fiat," while the legislative branch is shaping the Georgia program.

The other bills in Georgia would forgive college loans for certain nursing faculty, medical examiners and General Assembly staff members. The nursing faculty and medical examiner bills each have been approved by one chamber.

Representatives from both parties in other legislatures also are working on expanding financial assistance for certain kinds of workers. Two bills in New York, for example, would increase the amount of student loan reimbursement from $3,400 per year to as much as $8,000 a year for attorneys serving the indigent.

Meanwhile, in Missouri, a GOP-sponsored bill would forgive student loans for a broad swath of health care professionals who agree to work in underserved counties. The amounts of the loan forgiveness and the specific counties would be left to the state health department.

And in Maryland, a bipartisan $2 million bill would give veterinarians who have at least $40,000 in student loans from veterinary school up to $20,000 per year, for up to five years. The bill is a response to the shortage of vets in Maryland, which is also a problem around the country.

According to a study published last year by researchers at Washington University in St. Louis, forgiving student loan debt would have an immediate impact on former students and their families. The researchers asked participants to imagine loan forgiveness of $5,000, $10,000, $20,000 or full loan forgiveness — and how it would affect other household spending decisions.

Asked what they would do if their student loan payments were eliminated, 44% of those surveyed said they would pay other debts, 42% said they would save for emergencies, 30% responded they would save for retirement and 20% said they would save for a down payment on a home. Ten percent of those surveyed said they would invest in themselves by returning to school, saving for future education or starting a business.

Jason Jabbari, a professor who leads education research at Washington University's Social Policy Institute, said the survey participants did not plan to spend more on entertainment or make a large purchase, such as an appliance.

However, he told Stateline, "we did see somewhat moderate rates of people saying they would have a child."