CHARLESTON — President Joe Biden’s planned student loan forgiveness might have an outsized financial benefit for former West Virginia college students.
The plan would forgive $10,000 in current federal student loan debt for everyone making under $125,000 annually. Debt holders could be forgiven whether they actually earned degrees or certificates or did not.
For those who received federal Pell Grants, which are for students from low-income families, the Biden administration would forgive $20,000.
The most recent U.S. Education Department data, from March, shows West Virginia has 225,800 current student loan debt holders.
While it’s unclear how many make six figures or received Pell Grants, more than half of these 225,800 borrowers owe less than $20,000, and about one in three owe less than $10,000. The left-leaning West Virginia Center on Budget & Policy think tank did a previous breakdown of this debt burden with earlier numbers.
“It’s one of the poorest states,” said Nathaniel Burke, an assistant economics professor at West Virginia University. “And so the forgiveness level for West Virginians is going to be a greater percentage of their debt.”
West Virginia’s median household income is about $48,000.
The state has historically had among the nation’s highest percentages of borrowers who default on paying their federal student loans. The U.S. Education Department didn’t provide more recent state rankings last week.
West Virginia has no Ivy League schools with their accompanying high price tags. West Virginia University is the most expensive public undergraduate school in the state, yet the most recent data show that WVU — and Marshall University, the second-largest public college — had nearly the lowest rates of attendees failing to repay loans among all in-state public colleges. West Virginia’s highest federal student loan default rates are instead from its less-expensive colleges.
The latest default rates available for all colleges are for students who started repaying certain federal loans in fiscal year 2018. Students who didn’t incur any of this debt aren’t reflected in the rates.
The default rate is the proportion who had defaulted on paying by September 2020. As Burke pointed out, the default rates likely would have been higher if the Biden administration hadn’t frozen student loan payment requirements amid the COVID-19 pandemic.
The most recent default rate is 8% for Marshall and 7% for the WVU system as a whole, including the Beckley, Keyser and Morgantown campuses. The only West Virginia public colleges with equal or lower default rates are Shepherd University, at 7%, and West Liberty University, at 6%. It’s the public community colleges that generally have the highest loan default rates.
State legislators passed a law that, starting in 2019, generally assures first-time students free community college tuition for many certificates and degrees. But the latest default rates are from attendees who started repaying federal loans before that, and they show 27% of Southern West Virginia Community and Technical College attendees defaulting.
That was the highest among West Virginia public colleges. Following Southern in that ranking was an outlier among four-year schools: Glenville State University’s default rate was 19%.
Following Glenville were two more community colleges, Mountwest and West Virginia Northern, at 18%, and generally after that came other community colleges and then the four-year universities. However, the 13% rate at West Virginia State University matched the rate at two community colleges and exceeded Blue Ridge Community and Technical College’s 11%.
The state’s overall default rate in years past likely has been skewed by a Charles Town-based online college that, despite being a for-profit private school, is called the American Public University System. It enrolled 48,300 students last fall, well over half the total number enrolled at the state’s public two- and four-year schools.
Biden’s loan forgiveness plan would help all current college debt holders making under that $125,000 income threshold, whether they attended or attend public, private for-profit or private nonprofit schools. The default rate for American Public University System, which markets itself to U.S. armed forces members, was 9%, lower than most West Virginia public colleges.
Adam Kissel, chairman of the state’s charter school authorizing board and a fellow at state and national conservative/libertarian groups, has criticized Biden’s plan. He and Lindsey Burke, another Heritage Foundation think tank fellow, wrote in the conservative Daily Signal news outlet that the plan “will further inflate college costs, hinder economic growth, reward upper-income earners and provide a major handout to woke institutions of higher education.”
“The administration has stuck its thumb in the eye of the millions of working Americans who don’t hold college degrees but who will bear the cost of this federal largesse,” they wrote.
They also wrote that “when colleges raise tuition, knowing that the government’s easy money will let them charge more and more, they will not plow the money into faculty salaries, but instead into, in large measure, a growing army of ‘diversity, equity and inclusion’ officers and other administrative busybodies.”
Kissel told HD Media that “this is a transfer of money from the less-wealthy, less-educated population of West Virginia to the more-wealthy, more-educated population of West Virginia.” He noted that taxes paid by a $60,000-income person who never attended college could end up subsidizing someone who earns more.
But he also said it’s a “good bet” that West Virginia would be a “taker state” in this loan forgiveness. However, he doesn’t think that’s a good thing, saying “programs that take from the rich to give to the poor edge on socialism, which is a bad choice for the country.”
“I would say this program will function like other social programs, meaning that richer states’ taxpayers are going to be paying for the benefits enjoyed by West Virginians,” Kissel said. “There are net giving states and net taking states, and this is one more example of how our state will be a net taker.”