As the student loan payment restart date approaches, millions of borrowers are bracing for the financial challenges that lie ahead.
Student Loan Payment Restart Deadline Nears
The Covid-19 loan payment pause, which provided much-needed relief during the pandemic, is expiring in October, and borrowers like Shanna Hayes are wondering how they will cope with the imminent wave of student loan payment restart of repayments. Despite making significant financial strides during the pandemic, Hayes, a first-generation college graduate, and her partner are concerned about their ability to keep up with the student loan payment restart once they resume. The 42-month pause allowed many of the 40 million federal student loan borrowers to redirect their funds toward other financial goals. According to a recent survey by US News & World Report, 79% of borrowers used the money that would’ve gone toward student loan payment restart to pay down other debts, grow their savings, invest, or save for a home. However, as the pause comes to an end, borrowers like Roman Stadtler, who used the relief period to catch up on car and dental insurance payments, are worried about making timely student loan payment restart or repayments amidst other financial obligations.
The Biden administration has offered some relief measures to cushion the blow of the student loan payment restart. They introduced a temporary on-ramp repayment program that provides a 12-month period without penalties for late, missed, or partial payments. Additionally, they finalized the Saving on a Valuable Education (SAVE) plan, which offers a new income-driven repayment option to lower monthly payments and prevent interest from accumulating on unpaid balances. While these efforts aim to provide assistance, some borrowers, particularly those with graduate degree debt, feel excluded from the most generous relief. Lynne, a borrower who defaulted on her loans during her cancer treatment, is wary of triggering interest capitalization if she switches student loan payment restart or repayment plans. Many borrowers like Lynne and Stadtler argue that the structure of student loans, with interest capitalized at every turn, makes it difficult to pay off the principal balance. With the start of the student loan payment restart fast approaching, borrowers are eagerly seeking solutions to navigate the forthcoming wave of repayments. As the restart date looms, borrowers are voicing their concerns, hoping for better solutions to manage their student loan debt effectively.