After a three-year-long pause on federal student loan payments, Americans are expressing their financial unpreparedness for the implementation of $600 monthly student loan payments resumption, Yahoo reported.
Student Loan Payments Resumption: Are Americans Ready?
The looming burden of student loan debt has left individuals like Richelle Brooks, a single mother and high school principal earning $100,000 annually, uncertain about their ability to afford these upcoming $600 monthly student loan payments resumption.
Brooks, who recently had to move in with her mother due to unaffordable rents in Los Angeles, faces a staggering student loan debt of nearly $240,000 and wonders how she will manage the financial strain due to the $600 monthly student loan payments resumption.
The Biden administration is making preparations for student loan payments resumption by September, while the Supreme Court continues to debate the student loan forgiveness program.
During the payment pause, higher education expert Mark Kantrowitz revealed that the average borrower saved around $15,000 in student loan payments. However, concerns arise regarding the potential consequences if President Biden’s plan to forgive up to $20,000 in student loan debt does not pass.
Education Department Undersecretary James Kvaal cautioned that delinquency and default rates could rise as a result. Even prior to the pandemic, the federal student loan system faced challenges.
In 2019, only approximately half of borrowers were in repayment, while an estimated 25% (equivalent to 10 million borrowers) were in delinquency or default.
The remaining borrowers sought temporary relief measures, such as deferments or forbearances.
Experts Warn About Student Loan Payments Resumption
Economists warn that the student loan payments resumption could put a strain on the economy.
Marshall Steinbaum, a senior fellow at the Jain Family Institute and economics professor at the University of Utah, emphasized that the payment pause injected approximately $5 billion into consumers’ pockets.
He further stated that the economy has thrived without borrowers’ student loan payments and cautioned that their student loan payments resumption could have significant economic implications.
As the deadline for student loan payments resumption draws near, many Americans find themselves grappling with financial uncertainty and the challenges posed by their student loan burdens.