COLUMBUS, Ohio (WCMH) – In about 10 days federal student loan payments will resume.
It’s been more than three years since monthly payments were paused due to the pandemic. Now, borrowers need to get ready. For some, it will be their first time ever making payments.
“I’m not excited. I don’t think anyone is excited,” said loan borrower Jazmyne Harris. “I haven’t even thought about it just because the past three years… It hasn’t been top of mind.”
Right now there is $1.7 trillion in loan debt that affects 43.5 million Americans.
Brent Wells, a financial advisor with Young Wealth Management out of Worthington, said it’s going to have an impact on the economy – it’s just not clear how large it will be.
After more than a three year pause, it was announced this spring payments would resume, with interest starting to accrue again in October.
Wells pointed out there are changes this time around.
Most notably the Saving on Valuable Education, or SAVE plan, that will provide some of the lowest monthly payments possible.
“It used to be you’re responsible to pay a minimum of 10% of your discretionary income,” Wells said. “They’ve now changed that to 5%. So that can cut payments by quite a lot.”
Wells said to best be prepared. Loan borrowers should be paying attention to who their new loan servicer is, and how much payments will be. Once they have the amount – make a plan.
“Some people use a budget, some people don’t. In our opinion, everybody should,” Wells said.
“And so when you have that budget in place, you’re going to know exactly where you’re going to pull those funds to get that done. if you miss a payment, you can get hit with some penalties and then you also can have your credit be negatively affected.”
Which is what borrowers like Harris intend on doing.
“I’ll have to make some sacrifices here and there, like lifestyle changes, but not anything huge just because it is like a reasonable a