“We are told over and over throughout our lives that higher education is what we need to do. It’s the gateway out of poverty,” said Kerry Smith, an attorney with the Community Legal Services.
The Philadelphia-based non-profit provides free help to low-income people struggling with student loans.
“This is a systemic problem that we see many individuals in Philadelphia fall victim to,” said Smith.
It’s the reason why the settlement announced Thursday with Wilmington-based lending company Navient is so huge.
Sixty-six thousand Americans will have $1.7 billion in private student loans canceled. That includes more than 2,400 people in Pennsylvania.
RELATED: Whose student loans are canceled, who qualifies for payments in Navient settlement
Attorneys general from across the country, including Pennsylvania Attorney General Josh Shapiro, says Navient engaged in predatory lending.
“These were loans that were designed to fail. They didn’t care because they were not in it for the borrower, but instead in it to get a larger piece of the pie for federal student loans,” said Smith. “They were left with very high-cost loans that they had no ability to pay.”
It’s something Philadelphia City Councilmember At-Large Kendra Brooks says impacts everyone, but some groups are impacted more than others.
“We know who’s being affected by it: working-class folks, Black folks, and women,” said Brooks.
That includes her family. Brooks took out student loans for herself and two of her daughters.
“I think I’m down to $65,000 left for student loans,” she said of the amount she has left to pay for her own education. “This has followed me for 14 years.”
Smith says the average age of a person who seeks her organization’s assistance for student loans is 55 years old. Often, they are people who are saddled with debt from their college educations or their children or grandchildren’s schooling.
The settlement also includes $95 million in restitution payments for people who had federal student loans. About 13,000 people in Pennsylvania will receive checks for $260 each.
Navient never let them know they qualified for income-based programs that could have made payments as low as $0 a month. Instead, the company enrolled people into forbearance.
“Forbearance is when they are not making any payments, but what happens is the interest keeps accruing on that debt. That student loan debt is just growing and growing,” said Smith.
She adds that the effect ripples far beyond individual loans.
“This is really a civil rights issue,” Smith said. “Student loan debt is increasing an already-wide racial wealth gap.”
That’s why advocates like Brooks want the next step to be federal Student loan forgiveness.
“This will continue to be a problem until we see some real relief,” said Brooks.
Anyone whose debt is being canceled will receive a notice of that in July.
Federal borrowers who are eligible for restitution will get notices of those in the spring.
Smith reiterates that even for those not receiving loan cancellations, there is still help.
There is a federal pause on student loan repayments until May.
Smith suggests using that time to contact lenders and request adjustments to payment plans.
She also advises people to seek help from nonprofit organizations, who specialize in guiding people through the payback process for student loans.
Find more information on student loans from Community Legal Services click HERE.
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