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Experts have predicted the Supreme Court would rule against President Joe Biden’s student loan forgiveness plan, but some changed their minds after oral arguments, praising the lawyer who presented the administration’s case.
Solicitor General Elizabeth Prelogar’s “preparation, poise and power were impressive,” said higher education expert Mark Kantrowitz.

U.S. Solicitor General Elizabeth Prelogar
Artist: Bill Hennessey

The government’s top Supreme Court lawyer may have saved President Joe Biden’s $400 billion student loan forgiveness plan from what experts considered all but certain defeat.
Experts lobbed praise on Solicitor General Elizabeth Prelogar, the lawyer who represented the Biden administration in front of the nine justices Tuesday.

“The Biden administration now seems more likely than not to win the cases,” said higher education expert Mark Kantrowitz.
“Her preparation, poise and power were impressive,” Kantrowitz said.
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In contrast, the attorneys for plaintiffs opposed to the program were less than stellar, Kantrowitz said. “It was like the difference between a star quarterback and two tiddlywinks players,” he said.
University of Illinois Chicago law professor Steven Schwinn agreed: “Prelogar knocked it out of the park.”

“I do think she could have influenced or even changed the thinking of two justices, maybe more,” he added.
On Wednesday, Fordham law professor Jed Shugerman tweeted that he remains “struck by SG Elizabeth Prelogar’s brilliant performance.”

“She may have snatched victory from the jaws of defeat,” Shugerman wrote.
The nine justices considered two legal challenges to Biden’s plan to cancel up to $20,000 in student debt for borrowers. Six GOP-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — had brought one of the lawsuits, and the other was backed by the Job Creators Network Foundation, a conservative advocacy organization.
Prelogar argued that the president was acting squarely within the law to avoid borrower distress during national emergencies and that plaintiffs had not shown in any way that they’d be harmed by the policy, which is typically a requirement to establish so-called legal standing.
When the Biden administration rolled out its student loan forgiveness plan in August, it cited the Heroes Act of 2003 as its legal justification.

The Biden administration now seems more likely than not to win the cases.

Mark Kantrowitz
higher education expert

That law, which is a product of the Sept. 11 terrorist attacks, allows the U.S. secretary of education to “waive or modify” student loan programs to ensure borrowers aren’t left worse off because of a national emergency. Opponents of the president’s plan say canceling hundreds of billions in dollars in student debt for tens of millions of Americans goes far beyond the scope of the Heroes Act.
Justice Clarence Thomas, who kicked off the justices’ questioning of the Biden administration, seemed to echo that view.
“We’re talking about half a trillion dollars and 43 million Americans,” Thomas said. “How does that fit under the normal understanding of ‘modifying'”?
Prelogar countered that the heart of the provision’s purpose was to allow the secretary to make sure borrowers don’t suffer financially because of their loans during a crisis and that’s exactly what the Biden administration’s policy does.

Supreme Court justices listen to arguments.
Artist: Bill Hennessey

A top U.S. Department of Education official recently warned that the public health crisis has caused considerable financial harm to student loan borrowers and that its debt cancellation plan is necessary to stave off a historic rise in delinquencies and defaults.
“It couldn’t have surprised Congress one bit that in response to hardship posed by a national emergency, the secretary might consider similarly providing discharge if that’s what it takes to make sure borrowers don’t default,” Prelogar said.
Justice Elena Kagan agreed.
“This is an emergency provision,” Kagan said at one point, posing a hypothetical that the crisis had been an earthquake rather than a pandemic.
“You don’t think Congress wanted to give … the secretary power to say, ‘Oh, my gosh, people have had their homes wiped out, we’re going to discharge their student loans”?

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Increasingly, high school students are rethinking the value of college.
The rising cost of college and ballooning student loan balances have played a large role in changing views about the higher education system.
Still, earning a degree is almost always worthwhile, research shows.

Ben Kirkhoff, a high school senior at Cretin-Derham Hall in St. Paul, Minnesota, knows that a four-year college degree isn’t for him.
Even though his parents have a college savings account for him, he said money is still a factor. “I don’t want to put myself and my family in a lot of debt.”

Instead, Kirkhoff, who is 17, will attend Dakota County Technical College in Rosemount, Minnesota, next fall to become an electrician. The two-year program feeds into an apprenticeship and then a full-time position. “I’ll have a job right out of college and I know I’ll have a lot of job opportunities moving forward,” he said.
His parents support his decision to pursue a certification in a skilled trade rather than get a bachelor’s degree, he said.
Although Kirkhoff is the only one of his friends who decided against a four-year school next year, more high school students nationwide are questioning the value of college.
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For decades, research showed that earning a degree is almost always worthwhile.

Bachelor’s degree holders generally earn 75% more than those with just a high school diploma, according to “The College Payoff,” a report from the Georgetown University Center on Education and the Workforce — and the higher the level of educational attainment, the larger the payoff.
Finishing college puts workers on track to earn a median of $2.8 million over their lifetimes, compared with $1.6 million if they only had a high school diploma, the report found. 

However, some experts say the value of a bachelor’s degree is now fading as college costs remain high and a shortage of workers increases opportunities in the labor force — with or without a diploma.

Most high-paid jobs still require a college degree

A growing number of companies, including many in tech, are dropping degree requirements for middle-skill and even higher-skill roles. In his State of the Union address last month, President Joe Biden said some new jobs are “paying an average of $130,000 a year, and many do not require a college degree.”
“Good luck” finding those roles, said Anthony Carnevale, director of Georgetown’s Center on Education and the Workforce.
“Jobs for people without college degrees that pay over $130,000 a year make up 1% of the American economy.”

Over time, occupations as a whole are steadily requiring more education, according to another upcoming report by Georgetown’s Center on Education and the Workforce. And the fastest-growing industries, such as computer and data processing, still require workers with disproportionately high education levels compared with industries that have not grown as quickly.

Students from underserved communities are looking at education through a practical lens.

Dan Fisher
president and CEO of ECMC Group

In 1983, only 28% of jobs required any postsecondary education and training beyond high school. By 2021, that had jumped to 68%, the report also found. In another decade, it will climb to 72%.
To be sure, the recently enacted infrastructure law will create more jobs for workers with a high school diploma or less. According to the White House, the legislation will add as many as 1.5 million jobs a year for the next 10 years. “And they will be good jobs but after that, those jobs may be gone,” Carnevale said.

Students assess education ‘through a practical lens’

Most Americans still agree that a college education is worthwhile when it comes to career goals and advancement. However, only half think the economic benefits outweigh the costs, according to a separate report by Public Agenda, USA Today and Hidden Common Ground — and young adults are particularly skeptical.
The rising cost of college and ballooning student loan balances have played a large role in changing views about the higher education system, which many think is rigged to benefit the wealthy, the report found. 
Only 45% of students from low-income, first-generation or minority backgrounds believe education after high school is necessary, according to a study by ECMC Group.

High schoolers are putting more emphasis on career training and post-college employment, the nonprofit found after polling more than 5,000 high school students six times since February 2020.
“Students from underserved communities are looking at education through a practical lens,” said Dan Fisher, president and CEO of ECMC Group. “They want to know what the cost is, how they’re going to pay, how they will get through everyday life and whether there’s a job at the end of the road.”
More than half, or 53%, are open to an alternative path, and nearly 60% believe they can be successful without a degree.
Yet most said they feel pressure — mainly from their parents, community and internally — to go to a four-year school, even though community college or career and technical training may make more sense.

Ulrich Baumgarten | Ulrich Baumgarten | Getty Images

In part, there is a bias against vocational school that has been difficult to overcome, Fisher said. “We really need to destigmatize the idea that career and technical training is a lesser form of post-secondary education.”
Historically, interest in alternative career and technical training programs spikes during economic downturns, Carnevale said. Still, he advises students to find some path to higher education, whether through community college or an employer-sponsored tuition reimbursement plan.
Getting a degree offers the best shot at landing in the middle class, Carnevale said. “You have to figure out a strategy.”
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Although the number of fraud reports dropped to 2.4 million in 2022 from 2.9 million in 2021, the aggregate amount lost to the scams rose 44%.
Imposter scams were the most prevalent form of fraud reported, costing victims $2.6 billion, up from $2.4 billion in 2021.
Here are some expert tips to help you avoid becoming a victim of fraud.

Goc | Istock | Getty Images

Scammers are making more money per episode of fraud, new government data suggests.
While the number of fraud reports recorded through the Federal Trade Commission’s database fell to 2.4 million in 2022 from 2.9 million, the aggregate loss from those instances reached nearly $8.8 billion. That’s up 44% from the $6.1 billion reported in 2021 to the FTC.

Investment scams cost the most — more than $3.8 billion — compared with other categories and more than double the $1.8 billion reported in 2021. The second-highest reported loss amount came from imposter scams — the most prevalent form of fraud reported — with losses of $2.6 billion reported, up from $2.4 billion in 2021.
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Imposter scams involve criminals pretending to be someone else to steal the victim’s money or personal information. This could include romance scams or people claiming to be a government official or a relative in distress, for example.

Young adults fall prey to scams more often

Young adults (ages 20 to 29) reported losing money more often than older adults (ages 70 to 79). But when the latter did lose money, they lost more than anyone else, according to the FTC. And if people paid a scammer, the biggest losses came from bank transfers ($1.5 billion) and cryptocurrency ($1.4 billion).

Scams that started on social media resulted in people reporting losing $1.2 billion. Additionally, there were more than 1.1 million reports of identity theft in 2022. 

How to avoid falling victim to fraud

Here are some tips to help you avoid being the victim of fraud, according to Erin Witte, director of consumer protection for the Consumer Federation of America:

Slow down: Scammers “often create a false sense of urgency, making you think you have to respond immediately or something terrible will happen,” Witte said. “Slow down and take a minute to digest what you are hearing or reading.”
Avoid checks or gift cards: “Be wary of these payment methods,” she said. “Being asked to cash a check and return a portion, or being asked to purchase gift cards are big red flags that it is likely a scam.”
Ask questions: “Ask as many questions as you can to the person calling or emailing you,” she said. “Also ask a friend or someone you trust what they think about what you’re being told — they can often give you some perspective about whether the information you’re being provided is legitimate.”
Make a report: “Tell your local consumer affairs agency, your state attorney general, and the Federal Trade Commission about your experience,” Witte said. “You may help other people avoid being scammed.”

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First-time homebuyers now face several challenges: high home prices, rising mortgage rates and limited inventory in many locations.
Yet some markets may be easier to get into than others.
Here’s where experts see opportunity for first-time purchasers now.

A new Bankrate ranking found the Austin, Texas, metro area is the best for first-time home purchasers.
Roschetzkyistockphoto | Istock | Getty Images

Prospective buyers looking to secure the purchase of their first home this spring will still face a difficult market.
Yet there are signs some areas of the country may provide more opportunity for prospective owners shopping for their first piece of real estate. A new Bankrate ranking found the Austin, Texas, metro area is the best for first-time purchasers, while the worst is Washington, D.C.

The ranking of 50 metropolitan areas was based on affordability, which was given a 40% weight; job market, 30%; market tightness, 15%; and wellness and culture, 15%.
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Kansas City, Missouri, came in second in the ranking of best cities for prospective homebuyers, followed by Raleigh, North Carolina; Minneapolis and Jacksonville, Florida.
Austin’s high ranking was “surprising,” given that affordability dragged down its score, noted Jeff Ostrowski, analyst at Bankrate.
“Affordability is a challenge in Austin, but it’s not as challenging as in a lot of the California markets or in places where wages just haven’t kept up with home prices,” Ostrowski said.

Yet Austin and certain other major cities are poised to see double-digit declines in home prices as supply outpaces demand, according to recent research from Goldman Sachs.  

Home prices in Austin are projected to decline 19% from the fourth quarter of 2022 to the fourth quarter of 2024, the firm said. Prices in Phoenix, San Francisco and Seattle are projected to fall 16%, 15% and 12%, respectively, over the same time period.
Six of the 10 best metro areas in Bankrate’s rating were in Texas, Florida or Missouri, while six of the 10 least affordable metro areas were in California.
Boston, New York City, San Diego and Riverside, California, joined Washington at the bottom of the ranking.

Affordability remains buyers’ biggest challenge

First-time homebuyers now face several challenges: high home prices, rising mortgage rates and limited inventory in many locations.
“It’s tough to be a first-time buyer right now,” Ostrowski said. “The affordability equation is difficult.”
Affordability is still the No. 1 challenge for first-time homebuyers, said Zillow senior economist Orphe Divounguy. Yet home ownership remains key to building wealth in this country, he noted.
“The best advice for first-time homebuyers is to look at those markets that are relatively more affordable,” Divounguy said. “Look for markets where you’re going to have more bargaining power.”

A “For Sale” sign in front of a home in Roseville, California, on Dec. 6, 2022.
David Paul Morris | Bloomberg | Getty Images

Zillow recently put out its own list of best metro areas for first-time homebuyers in 2023.
The list includes Wichita, Kansas; the Ohio cities of Toledo, Akron and Cleveland; Syracuse, New York; Tulsa, Oklahoma; Detroit; Pittsburgh; St. Louis and Little Rock, Arkansas.

‘Start with knowing what you can afford’

“You have to start with knowing what you can afford,” Divounguy said.
Working with a mortgage professional and realtor can help first-time homebuyers get a sense of what best fits their budget, he said.

These other tips may also help:

You don’t necessarily have to put 20% down: Most buyers do not put 20% down when buying a home, according to Divounguy. The median buyer typically puts around 10% down, he noted. Moreover, some first-time homebuying programs make it possible to close a deal with as little as 3%. It is possible to get a Federal Housing Administration loan for 3% or 3.5%, Ostrowski noted. “That’s not necessarily ideal, but it’s also not terrible either,” he said.
It’s wise to anticipate closing costs: It’s a good idea to have extra cash on hand to pay for closing costs, Divounguy said. Working to improve your credit score will also help you secure better terms for your mortgage loan, he said.
Make sure you’re financially and mentally prepared: It’s also wise to make sure your purchase won’t leave you house poor. “You don’t want to stretch so far to buy a house that you then can’t afford to replace the refrigerator, or you panic if your homeowner’s insurance spikes,” Ostrowski said. One strategy you might want to consider is having roommates to help share the financial burden, he said.
Be strategic when considering location: While more affordable markets may be easier to get into, the risk is that your property may not appreciate as much, Ostrowski said. More expensive markets may take more sacrifice to get into, he noted. “You’re squeezed to get in, but hopefully your investment will pay off over time.”

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Even as the cost of living remains high, the number of Americans living paycheck to paycheck fell to 60% in January, according to a recent report.
“Consumers have accepted that inflation is part of their everyday lives,” says LendingClub’s Anuj Nayar.
A few key money moves can help your financial standing amid higher prices.

Despite higher prices, consumers are still spending, although not as much as they were a year ago, which is giving their budgets some breathing room.
As of January, 60% of all U.S. adults, including 45% of high-income earners, were living paycheck to paycheck, according to a new LendingClub report. That’s down from 64% a year earlier, suggesting that last year’s spending cutbacks have improved some consumers’ financial situations.

“Consumers have accepted that inflation is part of their everyday lives and they are actively making behavior changes, especially during the 2022 holiday shopping season, to adjust their spending and better manage their cash flow,” said Anuj Nayar, LendingClub’s financial health officer.
Yet the latest inflation reading from last Friday’s core personal consumption expenditures index was hotter than expected, showing some spending habits are hard to break. Consumer spending jumped 1.8% for the month compared to the estimate of 1.4%.
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To make ends meet as prices increase, more Americans are leaning on credit cards, other reports show.
At the end of 2022, credit card debt hit a record $930.6 billion, an 18.5% spike from a year earlier, and average credit card balance rose to $5,805, according to the latest report by TransUnion.

Total household debt also increased by 2.4% to $16.9 trillion in the fourth quarter of last year, the Federal Reserve Bank of New York found.

Now, nearly half, or 46%, of credit cardholders carry debt from month to month on at least one card, up from 39% last year, according to another report by Bankrate.com.
“If you have credit card debt — and more than a third of Americans do — then using some of your tax refund money to pay down this high-cost debt would be an excellent choice,” said Ted Rossman, senior industry analyst at Bankrate.

How to improve your financial standing

Certified financial planner Ted Jenkin, CEO and founder of oXYGen Financial in Atlanta and a member of CNBC’s Financial Advisor Council, offers other tips for spending less and maximizing your savings.

1. Cut spending

Jenkin said some simple financial hacks can help, such as going to the grocery store less and cutting back on online shopping.
“Grocery stores are just like Las Vegas; they are there to separate you from your wallet,” he said. Meal planning is one way to edit down your shopping list to weekly essentials to save money.
Disabling one-click ordering or deleting stored credit card information can also help. “Anyone that shops on Amazon and has a stored credit card, you are basically pouring lighter fluid on your budget,” Jenkin said.

You really have to get disciplined or you’re going to outspend your income.

Ted Jenkin
CEO and founder of oXYGen Financial

Jenkin recommends waiting 24 hours before making an online purchase and then using a price-tracking browser extension such as CamelCamelCamel or Keepa to find the best price.
Finally, tap a savings tool such as Cently, which automatically applies a coupon code to your online order, and pay with a cash-back card such as the Citi Double Cash Card, which will earn you 2%.
“You really have to get disciplined or you’re going to outspend your income,” he said.

2. Boost savings

The money you put away should also work to your advantage, Jenkin said.
Although deposit rates are climbing, even a high-yield savings account won’t pay enough to keep up with the rising cost of living.
Jenkin recommends buying short-term, relatively risk-free Treasury bonds and laddering them to ensure you earn the best rates, a strategy that entails holding bonds to the end of their term.
“It’s not a huge return, but you are not going to lose your money,” he said.

Another option is to purchase federal I bonds, which are inflation-protected and nearly risk-free assets.
I bonds are currently paying 6.89% annual interest on new purchases through April, down from the 9.62% yearly rate offered from May through October 2022.
Still, this will work well as a hedge against inflation for long-term savers. The downside is that you can’t redeem I bonds for one year, and you’ll pay the last three months of interest if the bonds are cashed in before five years.
LendingClub’s paycheck-to-paycheck report is based on a survey of more than 4,000 U.S. adults in January.
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While the number of personal bankruptcies remains relatively low, it has climbed 19.3% over the last year.
Total household debt stood at $16.9 trillion in the fourth quarter of last year, according to recent data from the Federal Reserve Bank of New York.
Here are the forms of debt that can and cannot be erased in bankruptcy.

Sneksy | E+ | Getty Images

For some individuals, the solution for eliminating crushing debt is to file for bankruptcy.
While the catalyst for going that route differs from person to person, it’s worth knowing which obligations can and cannot be discharged in bankruptcy. For instance, just last week, the U.S. Supreme Court ruled in a 9-0 decision that an individual cannot discharge debt that arose due to the fraud of another person.

Although the number of personal bankruptcies remains relatively low, it has been climbing. In January, there were 29,397 individual filings, according to the American Bankruptcy Institute. That’s up 5.5% from 27,866 in December and 19.3% from 24,645 a year earlier.
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However, filings plummeted through 2021 and 2022 as pandemic aid and programs (i.e., stimulus checks, enhanced unemployment benefits, lenders allowing pauses on mortgage or rent) eased pressure on household balance sheets.
“Steep bankruptcy [drops] abated over the past year as pandemic assistance programs and lender forbearance receded, while interest rates, inflationary pressures and debt loads grew,” said Amy Quackenboss, executive director of the institute. 

Total household debt stood at $16.9 trillion in the fourth quarter of 2022, according to the Federal Reserve Bank of New York. That includes $11.9 trillion in mortgages, $1.6 trillion in student loans, another $1.6 trillion in car loans and more than $990 billion in credit card debt. However, delinquencies have remained low.

Some debts cannot be wiped out in bankruptcy

First, while most forms of consumer debt — credit card debt, personal loans, medical debt, mortgages and auto loans — are generally fair game for either eliminating or negotiating a lower payback amount in bankruptcy, that’s not true for student loan debt.
“It’s really difficult to obtain full discharge of student loans,” said Michelle Bass, a partner at Wolfson Bolton Kochis and head of the law firm’s consumer bankruptcy practice group.
“You have to prove that your circumstances will never improve … and that being forced to repay them would be an undue hardship on you,” Bass said.

Other debt that cannot be erased include child support and spousal support (alimony). And, certain other debt owed as part of a court order during divorce may also be off-limits: support to the ex-spouse in the form of, say, continuing to cover a car lease payment.
“Many jurisdictions consider intent: Is [the payment] considered domestic support?” Bass said.

Recent debt may be considered fraud

Additionally, if you incurred the debt by fraud — i.e., you knowingly led a lender astray in the application process — you may not be able to erase it.
“If the lender can show that you provided false or misleading information in filing the loan application, information you should have known was incorrect, that debt could be found non-dischargeable,” Bass said.
Also, if you run up your credit card beyond $800 (excluding what’s spent on necessities) within 90 days of filing, the law assumes it’s fraud, according to the National Consumer Law Center. Same goes for cash advances above $1,100 from a single creditor in the 70 days ahead of filing bankruptcy.

If the lender can show that you provided false or misleading information in filing the loan application … that debt could be found non-dischargeable.

Michelle Bass
Partner at Wolfson Bolton Kochis

Taxes owed — unless older than the last three years of tax returns, generally speaking — cannot be discharged in bankruptcy either, she said.
Of course, “any tax debt incurred by way of fraud … would be nondischargeable under all circumstances,” Bass said.

Not everyone qualifies for Chapter 7 bankruptcy

There are several ways to file for bankruptcy. Most individuals typically choose between Chapter 7 and Chapter 13. Each has filing fees of a few hundred dollars, and enlisting an attorney can add $1,200 to about $3,500, depending on where you live and the complexity of your case.
Both Chapters 7 and 13 stop collection activity like calls from creditors or debt collectors, wage garnishments and, potentially, lawsuits from creditors. 
However, there are differences in who qualifies and how debt is treated in each option. Chapter 7 generally is for people who lack enough income to repay their debt and have little in the way of assets (they are subject to a “means test” before being approved). It also is the most common way to file individual bankruptcy.

This approach can quickly erase certain forms of unsecured debt, including from credit cards, medical bills and personal loans. It does not, however, necessarily stop your car from being repossessed or prevent home foreclosure, depending on the specifics of your case.
Meanwhile, Chapter 13 generally gives you three to five years to pay back certain debt and keep the asset (i.e., house or car). It also prevents creditors from garnishing your wages or putting a levy on your bank account. For this filing option, you must have sufficient income, and your debt must be below a certain amount (currently $2.75 million).
For individuals with debt above that threshold, Chapter 11 — which is largely similar to Chapter 13 — might be the best choice. This is the least commonly used option for individuals.

Your retirement accounts are protected in bankruptcy

The good news is that your retirement assets — including 401(k) plans and individual retirement accounts that you own and contributed to — generally are protected in bankruptcy. (Inherited IRAs do not get the same protection.)
An exception to this broad rule applies to IRAs, both traditional and Roth: Up to a set amount per person — currently about $1.51 million — is safe from creditors. Any excess could go to pay off creditors, unless the judge rules otherwise.

Your credit will take a hit, but also will rebound

A big downside of bankruptcy is what it does to your credit score, which may already be suffering if you’ve become 30 or more days late on a loan or other credit obligation. The filing remains on a credit report for seven to 10 years, although the impact decreases over time and your score will tick upward. 
“Whether they file Chapter 7 or 13, their credit is going to take a hit,” Bass said. “But most clients say it starts improving right away after a Chapter 7 discharge, and in Chapter 13, their credit starts to improve six to 12 months after filing.”
Regardless of which bankruptcy approach you take, you should be prepared to provide detailed information on your financial life to the court. That includes tax returns, bank statements, paystubs and the like.
Keep in mind, too, that having an initial consult with a bankruptcy attorney often is free. They also might have suggestions for handling your debt that does not involve bankruptcy.
“No one wants to call us and I know that … but usually after a consult they feel much better because they know their options and can make a game plan,” Bass said.

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The Supreme Court has the final say on Biden’s student loan forgiveness plan but college affordability will remain an issue for years to come.
Initially, legislation aimed at improving college access was followed by cuts in state funding for higher education, which paved the way for significant tuition increases.
As college costs have skyrocketed, outpacing inflation and incomes, families are forced to rely on student loans to help cover the tab.

A Jan. 2, 2023 protest in favor of federal student loan relief outside the U.S. Supreme Court in Washington, D.C.
Larry French | Getty Images Entertainment | Getty Images

A shifting financial burden

These days, tuition accounts for about half of public college revenue, while state and local governments provide the other half. But a few decades ago, the split was much different, with tuition providing just about a quarter of revenue and state and local governments picking up the rest.

Arrows pointing outwards

Over the 30 years between 1991-92 and 2021-22, average tuition prices more than doubled, increasing to $10,740 from $4,160 at public four-year colleges, and to $38,070 from $19,360 at private institutions, after adjusting for inflation, according to the College Board.
Wages haven’t kept up.
“Household income has been stagnant,” higher education expert Mark Kantrowitz told CNBC previously.
Because so few families could shoulder the rising cost of college, they increasingly turned to federal and private aid to help foot the bills.
The shift to “high-tuition, high-aid” caused a “massive total volume of debt,” according to Emily Cook, an assistant professor of economics at Tulane University.

“The federal government should get out of the student loan business,” Diana Furchtgott-Roth, an economics professor at George Washington University and former chief economist at the U.S. Department of Labor, told CNBC.
With nearly no limit on the amount students can borrow to help cover the rising cost of college, “there is an incentive to drive up tuition,” she said.
Now, “schools can charge as much as they want,” Furchtgott-Roth added.
Once families hit their federal student loan limits, they turn to parent student loans and private financing to be able to send their children off to college, an increasingly necessary step for people to have a decent shot at landing in the middle class.

Pursuit of advanced degrees drives up debt

More and more students feel they need to go to graduate school to be competitive in the job market. And more time in school means more costs, and a greater need for borrowing. Around 40% of outstanding federal student loan debt is now taken on post-college for master’s and PhD programs.
The average student debt balance among parents was more than $35,000 in 2018-19, up from around $5,000 in the early 1990s.
Meanwhile, the private student loan market has grown more than 70% over the last decade, according to the Student Borrower Protection Center. Americans now owe more in private student loans than they do for past-due medical debt or payday loans.
Every year millions of new students are pumped into the student loan system while current borrowers struggle to exit it.

Graduates choose longer, costlier payment plans

Many recent college graduates can’t afford the standard 10-year repayment timeline, according to Kantrowitz.
“Generally, people choose the repayment plan with the lowest monthly payment, which is also the plan with the longest term,” he said.
As a result, it takes people 17 years on average to pay off their education debt, data by the U.S. Department of Education shows.
Many borrowers put their loans on hold through forbearances, which cause their debt balances to mushroom with interest, and widespread failures in the government’s forgiveness programs have left those who expected to have their debt written off after a certain period still shouldering it.

The average loan balance at graduation has tripled since the 90s, to $30,000 from $10,000. Around 7% of student loan borrowers are now more than $100,000 in debt.
Without any intervention, over the next two decades, Kantrowitz estimates outstanding student loan debt could hit $3 trillion.
“Given how linear the growth in student debt is, it makes these events easy to predict,” he said.
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The Supreme Court will hear oral arguments in two cases that challenge President Joe Biden’s plan to forgive up to $20,000 in student loan debt owed by tens of millions of Americans.
Borrowers gathered outside the Supreme Court Monday to demonstrate in favor of forgiveness.
One case was filed by the Republican attorneys general of six U.S. states.
The Biden administration says the Covid pandemic public health emergency provides a legal basis to forgive student debt.
Experts say the court’s conservative supermajority is likely to strike down the plan if it finds the plaintiffs have legal standing to sue the federal government in the cases.

Student loan borrowers gathered at the Supreme Court in Washington, D.C., the evening before the court hears two cases on the White House student loan relief plan.
Jemal Countess | Getty Images Entertainment | Getty Images

On the night before the Supreme Court was set to hear oral arguments over the Biden administration’s student loan forgiveness plan, Amanda Smitley sat outside the court on an aluminum blanket holding an umbrella.
She didn’t know when she planned to spend the night staked outside the highest court that it would be pouring rain, but she wasn’t discouraged.

“I’m feeling great,” said Smitley, 20, who already has around $10,000 in student debt as a college sophomore at PennWest California. She’ll have to take out more if she wants to fulfill her hopes of graduating and becoming a high school history teacher.
“I really, really care about student debt, not even just for myself,” Smitley said. “I want to live in a world where my future students and maybe future kids won’t have to worry about getting into thousands in debt just because they want to further their education.”

Student loan borrower Amanda Smitley, 20, joined the student loan borrowers gathered at Supreme Court on Feb. 27, 2023, the night before the court hears two cases on student loan forgiveness.
Annie Nova | CNBC

Court will hear two cases against forgiveness

Despite the cold, borrowers gathered outside the Supreme Court Monday to demonstrate in favor of the Biden administration’s forgiveness plan. More than 35 million student loan borrowers could benefit from the policy, and have up to $20,000 of their debt forgiven. If implemented, an estimated $400 billion in debt would be wiped out.
But the program has been on hold since the fall, when a federal appeals court panel in St. Louis issued a temporary injunction barring it from taking effect. The Supreme Court has kept that injunction in place as it considers challenges to the plan, and the government on its own accord stopped taking applications for the program in November.
The Supreme Court is hearing two separate cases Tuesday on Biden’s debt relief plan.

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The first, originally lodged by six Republican-led states in federal court in Missouri, claims that Biden administration did not have the legal right to cancel student loan debts without congressional authorization.
The second lawsuit, filed by Myra Brown and Alexander Taylor, in U.S. District Court in Texas, argues that they and other members of the public were improperly denied the right under federal procedures to formally comment on the debt relief plan, which might have affected its design before it was put in effect.
The Job Creators Network Foundation, a conservative advocacy group, is backing the plaintiffs in that case.
Experts say the debt relief plan is likely to be ruled illegal by the court’s six-justice supermajority if that bloc find that one or more of the plaintiffs in the two cases has the requisite legal right, known as standing, to file a suit challenging the program.

‘For many people, this is life and death’

Student loan borrower John Runningen was also among those who planned to sleep outside the Supreme Court on Monday night. He attends Minnesota State Community and Technical College and owes $5,000.
That debt has already made his life more difficult.
“It’s stopped me from getting a vehicle, from moving out of my parents’ house and helping my parents with the stress of their bills,” said Runningen, 22.
As a first-generation college student, he hoped to break the cycle of poverty and assist his parents. His stepfather is a farmer and his mother works at a gas station. With a $175 monthly student loan bill, though, he won’t be able to help them.

Student loan borrowers gathered outside the U.S. Supreme Court on Feb. 27, 2023, the night before the court hears two cases on student loan forgiveness.
Annie Nova | CNBC

“To some people it might not seem like a lot of money, but for rural communities or those that are poverty-stricken, it’ll be the difference between me being able to give my family food or be able to afford an electricity bill,” Runningen said.
Within three weeks of the application process being opened, the Biden administration reported that more than 26 million people applied for the relief, with 16 million requests approved.
There’s no precedent in U.S. history for the kind of sweeping debt forgiveness that the White House has promised to deliver, although consumer advocates point out that large corporations and banks have been bailed out by the government after going through their own crises. And they say that canceling a large share of education debt is necessary to relieve the many borrowers struggling from a broken lending system.

Student loan borrowers were having problems repaying their debt before Covid. Only about half of borrowers were in repayment in 2019, according to an estimate by Kantrowitz. A quarter — or more than 10 million people — were in delinquency or default, and the rest had applied for temporary relief measures for struggling borrowers, such as deferments or forbearances.
These grim figures led to comparisons to the 2008 mortgage crisis and built pressure on Biden to deliver relief.
“For many people, this is life and death,” said Thomas Gokey, co-founder of the Debt Collective, a national union of debtors. “What’s at stake is being forced to choose between paying for student loans or being able to buy groceries, make rent and pay medical bills.”

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