COLORADO, USA — Every other student at Colorado's public universities and colleges can benefit from President Biden's loan forgiveness announced on Wednesday.
The president's plan calls for forgiving $20,000 for Pell Grant recipients and $10,000 in student loans for non-Pell Grant recipients, for students whose income is less than $125,000 as an individual or $250,000 for married couples.
Pell Grants are for students with exceptional financial aid.
Half of the students who graduate in Colorado leave public universities and colleges with debt.
"That debt is, about, an average of about $26,000," Dr. Angie Paccione, Executive Director of Colorado's Department of Higher Education, said.
The loan forgiveness proposed by the president would not cover Colorado's average student debt.
"We have, in Colorado, over 700,000 Coloradans who have some college, but no degree, so they are not able to maximize their earning potential if they don't have that diploma. So this way, for those students in particular, they can get out of that crushing weight of the debt," Paccione said.
She also pointed out that Colorado students are leaving money in Washington, D.C. that they could qualify for without having to pay back like a loan.
"We leave about $30 to $50 million a year back in Washington, D.C. that could be right here in the state," Paccione said. "Not have to be paid back. These are grants, not loans."
Paccione is referencing FAFSA -- Free Application for Federal Student Aid.
According to a report put out by the Colorado Department of Higher Education, Colorado high school seniors ranked among the lowest in the nation in completing FAFSA.
"Based on your parental income levels, what the parental contribution is, there's a few factors in there, but for the most part, you can get up to almost $7,000 a year," Paccione said. "Of course, the application, notoriously, is too long, too invasive. They're trying to make it shorter, less invasive. Until then, we want to try to get students to complete it."
Among students who go to college in Colorado, the FAFSA completion rate is high.
"About 82% of students who go to college complete FAFSA. So, it's a chicken and egg. Do they complete it because they're going and they need the money? Or do they complete it and find out that they can afford it and then they go? We don't really know," Paccione said.
According to a University of Denver spokesman, 43% of the 2021 undergraduate graduating class of DU, a private school, had federal student loan debt. The average was $21,025.
"When you think about things like endowments and their ability to fund scholarships, [they] are at a different level than our public institutions, and so that's where the difference is. I went to Stanford University, so there's a lot of scholarship money at Stanford," Paccione said.
For those who do not want to pay back a loan, or interest on a loan for that matter, Colorado has an investment option where money can be matched.
"Compound interest is a beautiful thing," CollegeInvest CEO Angela Baier said.
CollegeInvest is the state's 529 college savings plan. Money that can be used for education.
"I often to say hairdressers to Harvard," said Baier. "We're here for the children, the newborns and even high school students that haven't yet gone to college. And this loan forgiveness isn't going to be helping them, but savings will."
One program within CollegeInvest is the First Step Program for children born or adopted after Jan. 1, 2020.
Once an account is opened, CollegeInvest will contribute $100. It will also match up to $1,000 contributions each year for the next five years.
"By the simple principal of earning interest on your money versus paying interest, that savings can literally cut the cost of college in half," Baier said. "You can save $10,000 and it's like borrowing $20,000."