Posted on 10/09/2023 7:23:50 AM PDT by Diana in Wisconsin
This month marks the first time in more than three years that federal student loan borrowers will be required to make monthly repayments.
The Trump and Biden administrations enacted and then expanded a pandemic-related pause for about 44 million borrowers by freezing their accounts and restricting interest accumulation. But Congress ruled, as part of the debt ceiling package that it passed in June, that the relief program can no longer be extended. Payments resumed on October 1 for the first time since March 2020.
Before the pandemic, the federal government was collecting about $5.8 billion in payments each month. A recent report from the Wall Street Journal estimated that the restart could pull more than $100 billion from consumers’ wallets this year alone.
Before the Bell spoke with Betsy Mayotte, president and founder of The Institute of Student Loan Advisors, to talk about what that could mean for the economy.
*SNIP*
So how many Americans will have to resume these monthly payments by the end of October?
The last time I checked, there were more than 40 million federal student loan borrowers. A small percentage of those weren’t eligible for the Covid waiver. But for everybody else, unless they’re currently in school, here we go. All good things must come to an end.
(Excerpt) Read more at channel3000.com ...
The primary sentiment I’m hearing is that people feel overwhelmed and anxious. About 80% of the questions we’ve been getting from student loan borrowers over the last couple of months are about figuring out which payment plan works best. With federal student loans, we almost have an embarrassment of riches when it comes to the sheer number of different repayment plans there are. Borrowers feel overwhelmed trying to make sure they pick the right one. This is money we’re talking about and it’s a debt that could potentially have a long-term effect on their finances. It’s just, ‘My God, what plan do I pick?’
The cost of college has risen dramatically, and can now be $95,000 a year. Does something have to change or will debt levels keep rising?
You hit the nail on the head. I’ve been in this industry for over 25 years, and this administration has arguably done more for these especially vulnerable borrowers than any other has done, but it doesn’t fix the problem. Because the problem is the cost of higher education. What makes me a little nuts is that with all this discussion about whether there should be student loan forgiveness or whether this new lower payment option is too generous and not fair to the US taxpayer, there hasn’t been any discussion about the cost of education.
where are the parents of these kids!?!?
why would a parent saddle their kid with debt? why didn’t the parents pay for their college or take on the debt? Is that not investing in their future care givers?
Another “industry” the gov’t made, and the messed up.
A young person has to ask themselves:
Does a Ivy League education seem worth the extravagant costs?
A state college or community college degree gives you the same knowledge without all the frills or the debt.
An Ivy League sheepskin may be more impressive to hang on the wall of your office but you will be paying for that dead sheep for a loooong time.......................
Universities should stop DIE employees and hire financial advisors to help students understand debt and their financial future.
Maybe this will cause students to realize the destruction debt causes.
Exactly. College prices are high because of the subsidy. Government’s reaction is to keep increasing the subsidy to the point where young people can’t repay it, especially with the garbage degrees that they are getting. So now the government is trying to forgive the debt. Why should middle class taxpayers subsidize rich college professors who make several hundred thousand dollars a year? It makes no sense.
Since the economy is so wonderful, they should have no problem paying their debt
Right? Joe?
Indeed. I earned my Bachelor of Science degree at a private, "middle class" university in the mid-west USA, many years ago. Adjusted for inflation, tuition there is about 50% higher today than it was when I was a student there. I seriously doubt that today's students are getting a 50% better education than I got.
The primary sentiment I’m hearing is that people feel overwhelmed and anxious. About 80% of the questions we’ve been getting from student loan borrowers over the last couple of months are about figuring out which payment plan works best. With federal student loans, we almost have an embarrassment of riches when it comes to the sheer number of different repayment plans there are. Borrowers feel overwhelmed trying to make sure they pick the right one. This is money we’re talking about and it’s a debt that could potentially have a long-term effect on their finances. It’s just, ‘My God, what plan do I pick?’"DON'T KNOW WHAT TO DO"???I’m also hearing from people who have done the math and use the tools that are out there and looked at what their payment options are and still find that it’s not affordable for them, especially people that live in high cost-of-living areas like California, New York and Massachusetts. I hear a lot from them saying that they still can’t afford the lowest payment because their rent is too high or because they also have private student loans which don’t have lower payment options.
They can’t afford the loans and don’t know what to do.
The article mentions that borrowers are saying "My God, I might have to cancel Netflix!" Why the hell do they have time to watch Netflix instead of working to pay off their debts? If they are working hard, they won't have time to slouch in front of the boob tube.
The entire article is about finding the easy, painless way out for these voters (er, "students"). It smacks of nothing as much as vote-buying.
I bet they are getting 50% better facilities and dorms.
“The entire article is about finding the easy, painless way out for these voters (er, “students”). It smacks of nothing as much as vote-buying.”
Exactly.
To be blunt, the parents can’t. Many are paying loans off themselves.
A lot of Americans are living paycheck to paycheck. Credit Card debts are expanding to the highest level ever and Credit Card defaults are at their highest level since the Great Recession.
Student loan payments? Forget about it. Given the Biden Economy, people can’t pay their bills already. There will be a massive default on student loans.
“There will be a massive default on student loans.”
I believe you’re right...with a Government Bailout right behind it! Ugh!
The economic impact? The money’s already been “injected” into the economy, albeit universities don’t create wealth. They just spend it. In order to pay back the loans, the former students will have to create wealth. Seems like a wash to me.
These people should have been making payments on these loans the past 3 years, while no interest was accruing.
Rule #1 of life: NOTHING makes something more unaffordable than the government stepping in to make that thing affordable.
My son tells me he is the only one of his friends who isn’t burdened by student loans - they all have good IT salaries, none can afford a home, this will make it worse.
I was fortunately able to pay off my kids’ loans with an inheritance I received when my mother died.
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