When students graduate debt-free – CBS News

In 2019, Freddie Williams Jr. had a lot on his mind when he graduated from college: “That’s when, you know, it all started to kick in – hey, this is how much you owe, you’re going to have to start paying it back,” he said.

Growing up on Chicago’s South Side, he dreamed of going to Morehouse, the historically black college in Atlanta that features Martin Luther King Jr. “As soon as I got accepted and saw that, hey, the money was being offered, [I] I had no idea what I was really getting myself into,” he said.

And then, at graduation, Williams got the surprise of a lifetime when billionaire businessman Robert F. Smith committed to paying off his student loans. whole class, Paying off nearly $34 million in student and parental debt. “Let’s put some fuel in your bus,” Smith said.

Williams said, “It was crazy, you know? Looking back and seeing my parents in the stands crying and celebrating. That’s when I knew, okay, this is big.”

He said his total debt – about $125,000 – was a “tremendous” weight to lift.

Total student loan debt in the U.S. is now nearly $1.8 billion, and experts say many young people are delaying buying homes and starting families because of it. But the Morehouse Class of 2019 is something of an experiment: What would life be like when students graduate debt-free?

Filmmakers Joshua Reed and Emani Rashad Saucier, who were also part of the Class of 2019, are making a documentary about how their classmates are faring thanks to this generous gift.

“I think it’s only now, as we hit five years, that people realize the implication of what it means to not have loans,” Reed said. “You can buy a house right after graduation, like the people we interviewed did. Someone started a nonprofit to get black and brown students into technology. Someone has become a family man.”

Saucier said, “That’s what happened at Morehouse: They paid off the debt and got this exponential effect. What happens when we pay off the debt of millions of Americans?”

Last year the Supreme Court struck down President Biden’s ambitious $430 billion student debt relief plan. Since then, the Biden administration expanded existing programs to cancel $167 billion in debtwith most of the relief going to people working in the public sector and nonprofit organizations.

Josh Mitchell, author of “The Debt Trap: How Student Loans Became a National Catastrophe,” said, “They’re doing these piecemeal solutions, but they’re not doing anything to stop the underlying problem.”

Mitchell said Congress created the federal student loan program to expand access to college. But by allowing students and their parents to borrow virtually any amount to study virtually anything, the government has allowed colleges to raise tuition without consequences. “There’s a cycle of: students take out loans, schools raise tuition, students take out more loans,” Mitchell said. “This is essentially what has happened over the last 40 years. This is why tuition fees (until recent years) have grown at times triple the inflation rate.”

More than half (51%) of all college students now graduate with student loan debt, with the average owing $29,400, according to the College Board’s “2023 Trends in College Pricing and Student Aid” report.

Mitchell says these levels of student debt are negatively affecting the economy: “The US economy is the largest and most dynamic in the world, in large part due to higher education,” he said. “But there are also many students who are not in default on their loans, but are increasingly dedicating their paychecks to paying off debt. That’s money they could be using to save for retirement or buy a house. , or even to start a business For the average student, there is a reward for going to college, but I think the problem is that they are paying too much.

Asked why the cost of tuition has risen at a rate higher than inflation, Nicole Hurd, president of Lafayette College, a four-year private school in Easton, Pennsylvania, said: “Colleges and universities obviously need to be good stewards, and we have constantly look at our business model But I will say this: we are in the human capital business, and human capital is expensive. So when you think about investing in teaching, research, scholarships, these things are investments that we have. to do.”

Hurd worries that fear of student debt is discouraging low- and middle-income students who benefit most from attending college: “We’re so fixated on the price and we’re thinking about the price shock. We’re not thinking about the long-term investment as individuals, as families and as a country. If someone goes to college, their children will go to college, their grandchildren will go to college.

Tuition, room and board at Lafayette costs more than $87,000 a year, although in recent years the school has made efforts to offer more scholarships and fewer loans as part of its financial aid packages.

Hurd said, “Some debt is okay. A little skin in the game is not the end of the world. What we can’t have are people [having] tens of thousands, hundreds of thousands of dollars in student debt. This is not okay. But the nonprofit sector in higher education is doing a lot better in terms of being transparent about what debt is and then ensuring that students and families are making good choices.”

Still, more than 40 million Americans have student loan debt, with 3.5 million owing more than $100,000, according to the College Board. The Educational Data Initiative states that the the average interest on this debt is 6.87 percent; the average repayment duration, 21.1 years.

That’s why filmmaker Joshua Reed believes the story of the Morehouse Class of 2019 needs to be told. “People are being crushed by the immense weight of this debt,” he said. “But once they’re relieved, they can do all sorts of things.”

Freddie Williams Jr. said he thinks about not having to pay student loans almost every day. He returned to campus last month for the five-year reunion of that lucky class. Now a 26-year-old software engineer, he said that instead of paying off a mountain of debt, he pays off the gift early: “It was, you know, bigger than just getting my debt paid off. Because of this gift, you know , I was able to buy a house, and with me buy a house, which allowed my brother to move in while he was finishing his degree and I know, you know, in my soul that I have to give back and pass it on.”

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Story produced by Mark Hudspeth. Editor: Emanuele Secci.