Resumption of student loan repayments may cause hardship for millions
For the first time since the pandemic began, borrowers now have to resume paying back their student loans.
Since the Supreme Court rejected the Biden administration’s student loan relief plan this summer, interest on the loans started accruing Sept. 1 and repayments are due in October.
Jason Gonzales is a reporter for Chalkbeat, an education news website. He said this will be a tough adjustment for millions.
“No matter how much they’re paying it is going to be more difficult on them, and for some we have so many student loan borrowers out there who have never paid before, who graduated college in the last few years, so this is going to be a real shock to the system for them," he said.
More than 44 million Americans hold about $1.7 trillion in student loan debt.
Gonzales noted that there is still some form of relief for those repaying student loans — the government’s SAVE (Saving on a Valuable Education) plan.
“The big thing that it does is really reduces the interest on those repayments,” he said. “What that ends up doing is making sure that whatever amount that you’re paying, that interest isn’t growing in a way that outpaces your payments.”
The SAVE plan also cuts payments on undergraduate loans in half. Borrowers with undergraduate loans will have their payments reduced from 10% to 5% of their discretionary income.
Gonzales said people’s lifestyles have changed since graduation, making repayment more difficult.
“Folks have started families during this time, bought houses, that’s a whole list of expenses that they didn’t have before with this so it does put stress on them,” he said.
Gonzales said in many cases the pause in payments allowed recent college graduates to do all of this. Now they have to figure out how to pay for everything and pay back loans too.