30-Year-Old With $110K Student Debt Wanted PSLF; Balance Keeps Growing

  • Kjerstin Laine, 30, owes more than $110,000 in student debt from undergraduate and graduate programs.
  • In theory, Laine’s career in the non-profit sector offers a path to forgiveness.
  • But interest means she barely paid it off, and Biden’s pardon is just a drop in the bucket.

Like millions of student borrowers, Kjerstin Laine is in limbo for loan relief.

For Laine, a 30-year-old who has more than $110,000 in student debt, the $20,000 in forgiveness she will get from President Joe Biden’s plan is just a drop in the bucket. As a first-generation college student whose debt shaped the trajectory of her career, she fears her balance will balloon even more once the pandemic-era payment breaks end and interest begins to accrue again.

“I never miss a payment, always on time, and yet my balances never go down,” Laine told Insider. “I don’t understand how people can’t see there’s something wrong with that picture.”

Despite working through college and taking measures to cut costs, Laine finished her degree in 2014 with a total of $98,000 in debt from her undergraduate and graduate studies. In the eight years since, compounding interest has brought her balance to today’s amount, despite her consistent repayment.

Laine chose her job in communications for an educational-advocacy nonprofit because it was a good fit for her skills—and because it could qualify her for public service loan forgiveness, which settles student debt for government and nonprofit workers after 10 years of qualifying payments.

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But that program has historically been riddled with flaws, and she recently interrupted that strategy to take a marketing agency job with a salary that puts her much closer to the $90,000 the federal government estimated she needed to make a year to afford to pay her back. debt. She is also paying off medical debt.

“I also had to leave the non-profit sector to get anywhere near that, of course,” she said. “So it’s like that Catch-22.”

Laine is one of many millions of American borrowers stuck in an untenable situation. She is grateful for the relief she will get – although the legality of Biden’s pardon is still under scrutiny – but she is not sure she will be able to afford monthly payments when they start again in January.

Her situation points to the larger structural issues underlying the student debt crisis, where first-generation and lower-income students are taking on huge debt burdens to get ahead and increase their earnings, but are still buried under ever-growing balances. Many, like Laine, have shaped their lives around the hope of assistance — now that it’s here in some form, it may not be enough.

“The hardest thing is that I believed in this system that told me from a very young age my way to prosperity or a decent – not something outrageous – but a decent middle-class life where I can give back to the community who helped raise me and supported me through education programs, meal programs, things like that,” Laine said. “And it feels like a big broken promise right now.”

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Interest on student loans can balloon, meaning balances don’t go down—and can go up

As a college student in California, Laine worked at various jobs in places such as restaurants and grocery stores. She took classes at her local community college and at her university in the summer and winter to try to keep her expenses down. She graduated in 2012, a semester early to cut costs, and racked up nearly $18,000 in total debt for her undergraduate degree in journalism.

She went on to a “dream school” for a master’s degree in journalism, still working part-time, and left with an additional $80,000 in debt in 2014. At the end of her time at school, she was hospitalized for dehydration after she said she wore herself out running.

Despite consistent payments, Laine’s debt has grown in the years since graduation. This boils down to the issue of interest capitalization, which is when accrued interest adds up to a borrower’s principal balance and can result in debt loads far greater than what was initially borrowed.

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Biden’s administration has taken steps to prevent interest capitalization. In July, it released a proposal to end the practice in every case not required under the Higher Education Act, such as forbearance, but those changes won’t be implemented until next year. And borrowers still struggle to keep up with their payments.

For borrowers like Laine, interest could cancel out any of the relief Biden received within a few years.

“I was paying $300 until the pandemic hit. I was paying $300 a month, I think, for three to four years, and my balances never went down,” she said. “They always went up.”

Public servants like Laine can have their debts forgiven – but many can’t even get in touch with their loan servicer

While Laine is a big supporter of government loan forgiveness, she said it “has been plagued by its own issues.”

The company that manages the entire public service loan forgiveness portfolio — MOHELA — doesn’t make matters any easier. After a number of loan companies terminated their federal contracts last year, all borrowers enrolled in PSLF were transferred to MOHELA, and the process was not seamless.

Insider previously spoke with two borrowers who wanted simple questions answered about their PSLF payments, but ended up spending hours on the phone and never even connecting with a representative who could answer their questions.

“I’m really concerned about MOHELA as a service provider in total,” Laine said.

Student loan lenders gather to tell President Biden to cancel student debt

Student loan borrowers gather near the White House to ask for debt cancellation on May 12, 2020.

Paul Morigi / Getty Images for We, The 45 Million

While MOHELA never commented on the hours-long waits, Scott Buchanan, the executive director of the Student Loan Servicing Alliance — a group that represents federal loan servicers — previously told Insider that the Education Department decided how much resources it gave to loan companies. have, which affects how many customer service staff they can hire.

But with the PSLF waiver expiring Monday, which makes past payments, including those previously ineligible, count toward forgiveness progress, borrowers are in a time crunch to access the expanded relief. The department recently introduced permanent PSLF solutions for after the waiver expires, but this does not eliminate confusion that some borrowers may experience with their payment history.

“I would love nothing more than to be able to dedicate my entire career to serving this sector,” said Laine. “All my career choices are kind of centered around this debt, and it’s a very difficult, not nice place to be in.”


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