Repayment Resumption: Student Loan Borrowers Prepare for ‘The Wave’

Shanna Hayes and her boyfriend had some significant financial advancements during the pandemic, despite the fact that they both experienced layoffs at various points during the previous three years. 

The couple managed to relocate from cheaper New Hampshire to more expensive Washington, D.C. while paying off both of their automobiles and lowering their credit card debt.

Because of the COVID-19 loan payment suspension, which was implemented in March 2020, Hayes was not required to make any payments on her federal student loans. Hayes, like many other borrowers, is now again concerned about their ability to keep up with the payments when the reprieve expires and they resume in October.

The Biden administration has proposed many measures to lessen the impact of the start of repayments for debtors; however, some may not benefit from these initiatives.

According to Yahoo Finance, Hayes, a first-generation college graduate and former high school teacher who was dismissed earlier this year, said that the payment pause “was a life vest, and repayment is the wave that pulls you back out.” “Real people, which is the human aspect, are behind the numbers.”

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Riding the Wave

Most of the 40 million borrowers who were eligible to defer their federal student loan payments during the epidemic took advantage of the opportunity to save big money. According to author and student debt expert Mark Kantrowitz, “during the 42-month pause, borrowers saved an average of about $5,000 in interest and about $15,000 in total payments on their federal student loans.”

Some debtors, like Hayes, were able to handle hardships and pay off other debts. Other borrowers made different advancements.

According to a recent survey of 1,202 borrowers with federal student loans by US News & World Report, 79% of borrowers used the money that would have gone toward student Loan payments are used to achieve other financial objectives, such as debt repayment (40%), savings growth (37%), investment growth (28%), or house purchase savings (24%).

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Source: YAHOO