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Student loans have been plaguing New Yorkers for a long time, keeping many from getting ahead financially for decades.
Now, there’s some hope—the Biden Administration announced that it would provide families “breathing room” with a three-part plan to forgive at least $10,000 in student loan debt to eligible Americans (those who make less than $125,000). Pell Grant recipients could see up to $20,000 forgiven.
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The administration cited the skyrocketing cost of private and four-year public college (both of which have tripled since 1980) after inflation and the lack of federal support as to why it’s stepping in.
“Pell Grants once covered nearly 80 percent of the cost of a four-year public college degree for students from working families, but now only cover a third,” the White House states. “That has left many students from low- and middle-income families with no choice but to borrow if they want to get a degree. According to a Department of Education analysis, the typical undergraduate student with loans now graduates with nearly $25,000 in debt.”
According to an NYC report from 2021, about 1 in 5 New Yorkers (19%) had debt for higher education and 1 in 6 (16%) had student loan debt. These student loan holders were more likely to be Black, younger than 45, experiencing material hardship and more highly educated.
More than half of student loan holders in New York City owed more than $20,000.
With $10,000 in student loan debt canceled, there’s some relief New Yorkers can see, but given the high cost of rent and living here, it doesn’t seem to go as far as it would in other places.
That being said, most New Yorkers could pay for a few months of rent with the $10,000 they’ll save not paying student loans. Last month, we reported that the average cost of rent in NYC hit $5,058 a month and today, we reported that the median monthly rent has hit $3,930 (a record high).
What else could New Yorkers get with the freed-up $10,000?
- One year and eight months of groceries. Smartasset.com says groceries in New York City usually cost about $486.71 a month, per person.
- Three years’ worth of car insurance payments. Bankrate.com says the average cost of car insurance in New York is $2,996 per year for full coverage.
- Four years of monthly electricity bills. The average monthly electricity bill for NYC consumers is $178/month according to energysage.com.
- 3,636 subway rides. The cost of one subway ride is $2.75.