Study finds student loan borrowers struggle with monthly payments

The end of the student loan payment pause has not gone smoothly for many borrowers, according to recent data from the U.S. Department of Education. Only 60% of the 22 million federal loan borrowers who had payments due in October made payments by mid-November. Of these borrowers, more than 4 million owed payments for the first time, while others had not made payments prior to the pause due to delinquency or deferment.

The resumption of student loan payments has had a negative impact on the day-to-day financial health of many Americans. A report shared by MassMutual found that 76% of Americans with student loan debt said that restarting their loan payments had a negative impact on their financial well-being. This is not surprising considering that 19% of respondents have monthly payments of $750 or more. As a result, 80% of Americans with student loans have had to reduce their spending to accommodate their loan payments, and 60% fear defaulting on their loans.

To provide relief, the Biden administration created the Saving on a Valuable Education (SAVE) Plan, aimed at helping lower-income borrowers and those with high debts. The plan is an income-driven repayment (IDR) plan that calculates payments based on a smaller portion of adjusted gross income, making payments more affordable for a larger number of borrowers. The Department of Education is also providing extra financial support by suspending delinquency, default, and collections until September 2024 for borrowers who miss multiple payments.

Loan forgiveness programs are also being revamped, with the Department of Education approving close to $132 billion in debt cancellation for over 3.6 million borrowers. However, it is important to note that federal relief does not apply to private student loans.

For borrowers looking to lower their monthly payments, refinancing student loans may be an option. Credible, an online marketplace, allows borrowers to compare student loan refinancing rates from multiple private lenders without affecting their credit score.

Overall, the resumption of student loan payments has presented challenges for many borrowers. While the government has implemented relief programs and loan forgiveness reforms, the burden of student loan debt continues to impact Americans' financial well-being.


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