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More than two-thirds of federal student loan borrowers say they are not ready to renew their monthly payments.
This discovery interview was held for the Pew Charitable Trusts, which expires at the end of September, when the US Department of Education suspends payments and waives interest payments for borrowers.
About 60% of eligible borrowers said they used the extra money to cover basic expenses, including rent and food. The average student loan bill is about $ 400 per month.
“This shows that while the economy is recovering, not all households are recovering, so the pause in student loans continues to be an important lifeline for borrowers,” he said. Regan Fitzgerald, Pew Charitable Trusts project manager on the success of student borrowers.
There are signs that the White House is considering expansion.
US Secretary of Education Miguel Cardona said The Senate Appropriations Committee said in June that it was involved in discussions about whether October is the best time to resume payments. In May, at a conference of the Association of Educational Writers, Cardona said that the question of extending the pause in payments was already on the table.
At the same time, the recent change in the service of student loans could play into the hands of borrowers.
The Pennsylvania Higher Education Promotion Agency, which oversees loans to 8.5 million student borrowers, announced This month he will not renew his contract with the federal government when it expires in December. As a result, these borrowers will need to find a new lender.
“It will be difficult for PHEAA borrowers to resume repayment on September 30 and to change service personnel on December 14,” the higher education expert said. Mark Kantrowitz… “It would be better to combine both changes so that they happen at the same time.”
Democratic lawmakers and student borrower supporters are pushing for an extension.
Senator Elizabeth Warren, Massachusetts, and Senate Majority Leader Chuck Schumer, New York, sent a letter in June to President Joe Biden, urging him to maintain the suspension of payments until March 2022. This would mean that most borrowers would not have paid their student loans in two years.
More than 120 organizationsincluding the American Civil Liberties Union, the National Consumer Advocacy Center and the Consumer Federation of America also recently wrote to the president asking for an extension of the pause in payments until the student debt is canceled.
Before Covid, borrowers struggled with more than 1 in 4 in delay or default… After more than a year of record high unemployment, this pain has only intensified. Congressional Budget Office recently predicted that the unemployment rate among young workers would improve more slowly than the general rate.
“Most likely, the pause in payments and the waiver of interest will be extended if the unemployment rate for college graduates has not yet returned to normal as of September 30, 2021,” said Kantrowitz.
However, Kantrowitz said borrowers may be underestimating how willing they are to resume payments after such a long hiatus.
“What people say and what people do are often two completely different things,” he said.