If you were facing suspended debt with the outcome of that suspension questionable what would you do? I’d be making those payments anyway – to myself – build up a modest nest egg I could use to make a large payment toward my debt if and when it became necessary.
The great majority of those borrowers were still able to make their payments even in the face of the pandemic, but took advantage of the suspension anyway. If they had made payments it would all go to the loan balance , if not there was no interest being charged. Either way it was significant help toward paying the loans.
ON THE OTHER HAND, not making payments, spending the money previously used for payments (when not absolutely necessary) and taking on more debt was a strategy used by many of the 43 million and now they will be in a pickle.
When billions of dollars in student loan payments come due in October, economists and advocates warn it could be a jarring experience for tens of millions of people.
However, they say, there’s still time to prepare and even apply to see if you can keep your payments as low as they have been: nothing. That will be critical for many borrowers, who haven’t had to make student loan payments in about 3½ years, since the pause was first created by the Trump administration at the outset of the COVID-19 pandemic.
During that time, about half of the 43 million people holding some $1.6 trillion in federal student loan debt have borrowed even more – in the form of car loans or mortgages or credit cards, the Consumer Financial Protection Bureau said this month. Some of them are falling behind on those payments even without having added a student loan bill to their monthly budgets. And for about 40% of borrowers, the company that handles their payments will be different than before the pause. That could be confusing for some borrowers.
USAToday.com
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The average monthly student loan payment is about half of a car payment… $200-300 a month. If they can buy a car, they can make their student loan payments.
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Exactly. And the ones with higher loans are typically professionals.
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Every college that graduated these students who do not understand the basics of loan finance should have their accreditation pulled for failure to properly give their students a sound education.
Loan basics: Pay the loan on time. If you can, put extra money on the loan, especially mortgages. Skipping payments only costs you more. If you do not understand a loan, don’t sign it.
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The same borrowers screaming about re-starting payments are probably the same ones in the airports complaining about the canceled flights that they put on their credit cards.
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Back to normal. I’ll wager many of those student loans were in arrears before Covid. I’ve been hearing for many years what a burden that debt was.
I’m not trying to be unsympathetic to those folks but I’ll also wager the 500-1000 dollars per month car loans are preventing many from being able to keep student loans current. So many people think that debt piled to the sky is the way to operate. Credit is a good thing only if it is used wisely.
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We need to get the politicians to include College loan debt in the Bankruptcy Law, this would allow those truly in need to be able to have a fresh start, just like all those companies and people that use the Bankruptcy Laws to have a fresh start. Everyone else can pay their loans just like most of us. Under the 2003 bankruptcy law if there is income after the bankruptcy you may still have to pay something to your creditors. My sister had to pay $275 per month for 36 months when she filled bankruptcy in 2005. Student loan debt should of never been exempt from bankruptcy in the first place.
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