They Got the Debt, but Not the Degree

Michael Chaney just couldn’t pass algebra.

He took the class at least four times from two different institutions before he gave up on a plan to pursue architecture, a career path suggested by a vocational program after he injured his back on the job in a steel mill in 1996.

Still unable to pay off what he borrowed more than a quarter-century later, he said, he owes the federal government more than $63,000 for a degree he never received.

“For me to be retrained, I had to take out student loans,” Mr. Chaney, 56, said. “I had two babies and a disabled wife at the time, and I didn’t have the choice.”

Millions of Americans like Mr. Chaney borrowed to finance an education they didn’t complete. The reasons vary — the coursework didn’t fit their skills, illness or family circumstances foiled their academic careers — but the result is the same: debt, sometimes in the tens of thousands of dollars, but no degree.

Now, with President Biden considering a forgiveness program to lighten the load on some — or all — of the nation’s 45 million federal student loan borrowers, debate has focused on whether it is appropriate to grant relief to those who borrowed money to increase their earning power. But the many borrowers who didn’t get the professional benefits of a degree would be perhaps the biggest beneficiaries.

Exactly how many borrowers fit that description is unclear, but it appears to happen frequently. Nearly 40 percent of full-time undergraduates who enrolled in the 2011-12 academic year accumulated some debt but did not have a degree after six years, said Mark Huelsman, the director of policy and advocacy at the Hope Center for College, Community and Justice at Temple University.

About 37 percent of borrowers enrolling in four-year institutions in 2013 didn’t graduate within six years, either, according to the National Center for Education Statistics. The rate was even higher — 75 percent didn’t earn a credential — at private, for-profit institutions.

“Fewer people end up getting to the finish line than a lot of people might think,” Mr. Huelsman said. “Even though college completion rates have ticked up slightly over the past several years, a very large portion of students simply do not finish a degree program.”

Mr. Chaney, of Circleville, Ohio, attended Columbus State Community College and Franklin University before turning to jobs in information technology, then truck driving. The debt was always more than he could afford, he said, and he filed for bankruptcy in 2012.

Michael Chaney is a 56-year-old truck driver with more than $68,000 in federal student debt.Credit…Brian Kaiser for The New York Times

But that didn’t do anything for Mr. Chaney’s student loans, which are notoriously more difficult to discharge than other debts. In the years he spent sending money tocreditors under a Chapter 13 payment plan, his student loan balance ballooned.

“I have always worked,” he said. “Never made over $40,000.”

Even much smaller balances can be a lingering burden for people without degrees, who are also more likely to slip into default.

In 2009, Xavier Sanchez started a nine-month audio engineering program in Manhattan to get the kind of hands-on experience that would prepare him for a job as a recording engineer. But the experience left him underwhelmed — the school didn’t provide him with the skills and equipment he had expected, and the classes, which were often run by substitutes, were lacking, he said.

He dropped out after four months, but more than a decade later he’s still on the hook for about $7,000 in federal loans.

“I felt cheated out of a proper education,” said Mr. Sanchez, 36, of Dallas. He tried to have loans discharged through a federal program for misled borrowers but was rejected.

The debt could soon go away anyway. Mr. Biden has backed the idea of student loan relief since before his presidency, promising to knock $10,000 off the loans of “everybody in this generation.” The issue has been a subject of debate within the White House, and administration officials said no decisions had been made yet.

Forgiving $10,000 per borrower would completely wipe out the debt of 15 million individuals, or roughly a third of all borrowers, including 4.65 million who were delinquent or in default, according to Education Department data sent to Congress last year.

Roughly half the households with debt of less than $10,000 did not obtain a bachelor’s degree, according to an Urban Institute analysis of the 2019 Survey of Consumer Finance data, the most recent available. Forty-one percent had some college, or an associate, degree.

“Those with the lowest debt levels are least likely to have degrees, so $10,000 of forgiveness is most likely to fully eliminate debt for people with the least education,” said Matthew M. Chingos, who directs the Center on Education Data and Policy at the Urban Institute.

Student Loans: Key Things to Know

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Debt reduction. President Biden said that he is considering wiping out some student loan debt and will make a final decision “in the coming weeks.” The comments were the clearest signal yet that he may make good on one of his campaign promises.

New sources of aid. The Education Department will use one-time waivers and adjustments to retroactively credit millions of borrowers with additional payments toward loan forgiveness. The move will help people seeking to have their loans eliminated under the Public Service Loan Forgiveness program and through the use of income-driven repayment plans.

Payments delayed again. President Biden pushed the restart date for federal student loan payments to Sept. 1, extending a pause put in place at the start of the pandemic. Millions of borrowers who have defaulted on their federal student loans will also get a fresh start and have their loans restored to good standing.

The cost of private loans. As the Fed changes its benchmark rate, private student loan borrowers should expect to pay more, as both fixed and variable rate loans are linked to benchmarks that track the federal funds rate.

Those who carry high debt loads without a bachelor’s degree, like Mr. Chaney, are a smaller but still meaningful group. About 15 percent of households that owe at least $30,000 have only some college classes or an associate degree, according to the Urban Institute.

Extinguishing $10,000 in debt wouldn’t make a big dent for those borrowers, though it would get them marginally closer to the finish line. They include Nailah Summers-Polite, who received an associate degree from Miami Dade College in 2010 without taking out any loans — then accumulated roughly $62,000 in federal debt pursuing a bachelor’s she never completed.

Ms. Summers-Polite, 34, enrolled at the University of Florida in the spring of 2011 to pursue a degree in African studies. But she began to feel overwhelmed the next fall: Coursework, a part-time job and her involvement in an activist group after the killing of Trayvon Martin had made her depressed and anxious, she said.

Nailah Summers-Polite, 34, accumulated roughly $62,000 in loan debt pursuing a bachelor’s degree. Credit…Gesi Schilling for The New York Times

“I had really good professors who were for the most part really understanding, but it was too much,” she said. “It was a tumultuous time.”

Ms. Summers-Polite withdrew from her classes in spring 2012 with a medical note that prevented her from receiving failing grades, but the debt had already begun to accumulate.

She said she had deferred her payments as long as she could, which meant the unpaid interest was tacked on to her balance. Then she borrowed more in the summer of 2013, when she returned to take a few more classes. After that, she took a two-year break to work, which provided much-needed health insurance after she was no longer eligible for her parents’ plan.

Ms. Summers-Polite, who lives in Miami, gave schooling another try in 2016, but once an attractive job opportunity arose — communications director for the activist group — she took it, and hasn’t returned. She said she was making good money now, but her loans had already fallen into default, and getting out isn’t as simple as starting to send monthly payments again.

Ms. Summers-Polite was married in November, and her husband, a spa coordinator at a large gym, has $27,000 in debt of his own. He just went back to school after a 10-year break, and is taking out more loans to pay for it.

She would like to finish her degree, too, but isn’t in a position to pay out of pocket for classes, particularly with the pandemic pause on payments set to end later this year and her enormous debt looming.

“In the past few years, it has been this glaring thing in my periphery,” she said, “getting bigger and bigger.”

Alain Delaquérière contributed research.

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