Her $90,000 in student debt trailed Jill Witkowski Heaps for decades, like a pesky private eye, as she moved from New York to Fort Myers to New Orleans to Annapolis, always hovering to remind her of her negative net worth.
And then one day, while sitting in a coffee shop near Buffalo, she learned it was gone. “Congratulations!” the email from her loan servicer, FedLoan, said. “You qualify for loan forgiveness.” Her balance was now $0. First, Heaps cried. Then she texted her husband. Then she logged onto the FedLoan website to make sure the email wasn’t some sort of cruel joke.
“It was like I won the lottery,” says Heaps, a 43-year-old environmental lawyer whose loans were forgiven under the Public Service Loan Forgiveness program, which is supposed to allow people who work for nonprofits or the government to wipe out their loans after making 120 payments over 10 years. The program is a boon, but in reality, a tiny fraction of the people who applied for the program have received forgiveness.
The sheer balance of student loans in the U.S.—around $1.6 trillion, up from $250 billion in 2004—has made student-debt forgiveness a popular idea among politicians like Senators Elizabeth Warren and Chuck Schumer, who introduced a resolution in February calling on President Joe Biden to cancel up to $50,000 for people with federal student-loan debt. Biden has said he is prepared to forgive $10,000 in debt for individuals with federal student loans.
The idea is controversial—people who have successfully paid off their loans say it’s not fair to erase the debt of others who weren’t as fiscally responsible. Plus, widespread forgiveness is expensive—the Warren/Schumer plan could cost as much as $1 trillion.
But the scope of the economic crisis created by the pandemic, and the fact that borrowers who graduated before 2007, like Heaps, have weathered two massive financial downturns in their professional careers, is bolstering the argument that major fixes are needed. Although student-loan forgiveness did not make it into the American Rescue Plan passed by Congress, the bill does include a provision to make college-loan forgiveness tax-free until Dec. 31, 2025, eliminating an important barrier that would make it easier to implement broader forgiveness in the future.
Heaps’ story suggests that forgiveness could be good for the economy in the long run. Once she wasn’t paying $700 a month toward her loans, which still totaled $36,395 when they were forgiven, Heaps and her husband had enough money for a down payment on what she calls their “forever” home, which they moved into in February. She can finally provide her 4-year-old son with some stability and the confidence that he’ll be able to stay in the same school system for as long as the family wants. His parents started a college savings plan for him, in the hope he’ll avoid the kind of debt that plagued Heaps for so long.
Research indicates that Heaps’ experience isn’t unique. One study of people whose loans were canceled when the lender lost important paperwork found that the borrowers, freed from the inertia that often accompanies debt, were more likely than other people to move, change jobs and see pay raises.
Since the first pandemic-era stimulus package was enacted in March 2020, millions of Americans have been able to experience life free of the crippling burden of student-loan payments. The CARES Act paused payments on federal student loans and set a 0% interest rate on those loans through September 2020; the Biden Administration has extended that pause until September 2021, affecting some 42 million borrowers.
“Having the payment suspension is very helpful,” says Persis Yu of the National Consumer Law Center (NCLC). “But it makes them kind of realize what it might be like to not have student loan debt at all.”
For decades, young people were told that a college education was the surest path to achieving the American Dream. But as wages have stagnated, many former students who took out loans to pay for school are finding that the well-paying jobs they expected to land have disappeared. The burden falls hardest on Black and Latino students, who are more likely to take out loans than white peers.
For every person like Jill Witkowski Heaps, there are dozens like Sharie Zahab, who graduated from law school in 2000 with about $83,000 in federal and private loans. She now owes about $121,000 because of various pauses in payments, which allowed interest to accumulate.
Zahab, 48, has weathered three recessions, in 2001, 2008 and 2020, and has been laid off multiple times. She could have qualified for the Public Service Loan Forgiveness program, since she worked for Legal Aid after law school, but lost that job during the Great Recession. When she found work again at a firm representing landlords, she was no longer in public service and thus ineligible for the program.
Whether borrowers get to pause payments on their loans is sometimes random, as Zahab found after she was laid off again in June 2020. She thought she was receiving a pause on her loans because of the CARES Act, only to learn that her federal loans fall under the Federal Family Education Loan Program, which means they are held by private companies and not eligible for the federal pause.
She then tried to enroll in an income-based repayment program but says her loan servicer, Navient, made it difficult, demanding a certified letter from the state’s unemployment office proving she was jobless. This was the same office that was so overwhelmed with unemployment claims and tech issues at the start of the pandemic that millions of people couldn’t access unemployment benefits. “They gave me the worst runaround for months—I literally called them crying,” says Zahab.
Zahab’s debt has prevented her from living the life she wanted. “I didn’t get married because I didn’t want to have anybody saddled with my debt,” she says. “I didn’t have kids because of it. It basically controlled my entire trajectory.” (High student-loan debt has been shown to harm women’s chances of marriage.) Zahab says she would love to leave her legal career behind and teach, if she could only escape her debt. She’s not alone in feeling professionally constrained; a 2017 study found that holders of student debt were less choosy in the job market and more likely to accept suboptimal jobs that were part-time or in a field that didn’t interest them.
Zahab’s experience highlights the problem of programs that are supposed to help people but that are nearly impossible to access. One federal income-driven repayment program bases monthly costs on a borrower’s income and forgives debt after 20 years of payments. But just 32 of the roughly 2 million people who might have been able to qualify for the program had their loans forgiven, according to a recent report from the Student Borrower Protection Center and the NCLC. Part of the problem is that the private companies servicing loans steered borrowers away from such programs, according to multiple lawsuits. The government also allows people who believe they have been defrauded by private for-profit colleges to apply to have their loans forgiven. On March 18, the Department of Education said it was streamlining that process for 72,000 such borrowers who were denied full relief during the Trump Administration.
Zahab was finally able to enroll in an income-based repayment program in February, lowering her monthly payments from $934 to $53. She’ll have to make payments for two decades before her remaining debt is forgiven.
Heaps says her experience was similarly infuriating. Over the years, she spent hours on the phone with different servicers as her loan was transferred from one company to another; they often gave her incorrect information, she says. At times, she didn’t think she’d succeed, and in fact her application was denied in October 2019. A manager at the loan servicer told Heaps that the Education Secretary at the time, Betsy DeVos, would have to sign off on her forgiveness application personally.
The hassle made her more determined than ever. “I was like, ‘I am going to outplay you; you are not going to get me to go away,'” Heaps tells me.
The experiences of Zahab and Heaps underscore why blanket forgiveness can seem appealing. Rather than force individuals to jump through countless hoops, why not just wipe out a portion of everyone’s loans, as Warren and Schumer proposed? But that may not be equitable, because those who have the highest level of debt forgiven tend to be those with advanced degrees, who are earning high incomes. A better idea, advocates say, would be to make it simpler for everyone to access income-based forgiveness programs. One such program, Revised Pay as You Earn, or REPAYE, lets borrowers pay 10% of their discretionary income; after 25 years of payments, or 20 years for people who took out loans for undergraduate study, the remaining debt is wiped out.
A number of lawsuits are attempting to make it easier for borrowers to learn about and access those forgiveness programs. A February settlement between Massachusetts attorney general Maura Healey and the Pennsylvania Higher Education Assistance Agency (PHEAA), which does business as FedLoan Servicing, requires PHEAA to restore borrowers’ progress towards loan forgiveness if errors caused them to get off track. After a class-action lawsuit filed by members of the American Federation of Teachers, the loan servicer Navient agreed in October to help steer more borrowers toward loan-forgiveness opportunities.
There might be a way to cut servicers out of the process entirely, says Matthew Chingos, who runs the Center on Education Data and Policy at the Urban Institute. This would eliminate the conflict of interest inherent in having private loan companies, which are tasked with collecting payments, being trusted to advise people who want to escape those loans. Instead, payments could be taken out of debt holders’ paychecks, the way taxes are, with the IRS’s share rising or falling according to an individual’s income. “We want to get into a system where people who are really struggling and are in an economic crisis don’t have to worry about it,” Chingos says. “Kind of like [the government] has been doing, saying, ‘This is a crazy time, you don’t have to pay your student loans.’ But in a more targeted way, forever.'”
Of course, income-based repayment programs don’t fix the system that got so many people so deep into debt in the first place. But until the wages that come after an education can match the cost of loans, forgiveness is one way to ensure that Americans trapped in student-loan debt and prevented from buying homes, saving for retirement and starting businesses will be able to join the economy.
Both Zahab and Heaps started with law degrees and mountains of debt; because of twists of fate, Zahab’s debt has grown while Heaps’ has disappeared. If Zahab hadn’t been laid off from her public-service job, she might also be debt-free instead of facing down decades of payments. As Heaps would tell her, getting debt wiped out is life-changing. “It opened the possibilities of different things I could spend my money on,” says Heaps, who no longer has a negative net worth. “I feel like my financial life has finally begun.”
–With reporting by Alejandro de la Garza
This appears in the April 12, 2021 issue of TIME.