It has been almost two years since most borrowers had to pay their monthly student loan bill.
And yet 93% of them are not ready to resume payments on May 1, according to a survey of more than 23,000 student borrowers by the Student Debt Crisis Center.
“The payment break meant everything,” said Allison Newmes, 44. “There are no words.”
Newmes, a mother of three in Youngsville, North Carolina, has a federal loan balance of about $46,000 and monthly payments of more than $600.
Allison Newmes and her family.
Courtesy of the Newmes family
Her husband, Ernest, works as a mechanical engineer, but his heart condition has left the couple with significant medical debt, Newmes said. They cashed in their 401(k) retirement accounts to make ends meet and now the couple have no financial safety net.
“I don’t know how we’re going to do it,” she said of upcoming student loan repayments.
“It’s like we’ve fallen through the cracks.”
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Once payments restart, the amount owed will be largely the same, since interest on most federal student loans was suspended during the government payment pause.
However, the cost of living has changed dramatically.
According to the most recent government data, the consumer price index, which measures the costs of consumer goods, rose 7.5%, the fastest annual pace in about four decades.
Even as wages rise, inflation has eroded wages by 1.7% over the past year.
Since her husband was disabled and unable to work, Laura Estrada, 56, now has two jobs to cover her expenses.
Estrada and her husband live in Wichita Falls, Texas, where rents are on the rise. The couple have a monthly rent of $1,350. “In this area, it’s actually pretty cheap,” she said.
But with a degree in English and a master’s degree in criminal justice, she also has $155,000 in outstanding student loans and they’re struggling to stay afloat, she said.
“The payment break was a blessing, we were able to afford groceries, just the simple little things,” Estrada said.
Once her loan payments resume, “it looks like I might consider a third job,” she added.
Among fully employed borrowers, 92% reported worried about being able to afford their payments due to rising prices, the Student Debt Crisis Center found.
“The ongoing pandemic combined with unprecedented inflation are huge hurdles for borrowers who, on the whole, are not ready to resume payments, are struggling to meet their basic needs and are confused about their options moving forward,” said Natalia Abrams, president and founder of the Student Debt Crisis Center.
For some, it may make sense to sign up for an income-driven repayment planshe says.
These programs aim to make borrowers’ payments more affordable by capping their monthly bills at a percentage of their discretionary income and canceling any remaining debt after 20 or 25 years.
Alternatively, you can request a deferral, which allows you to suspend your loan for up to three years, or a forbearance, which allows you to temporarily suspend payments for up to one year. However, in this case, interest will continue to accrue.