NORFOLK, Va. — After three years and several extensions on the pause of federal student loans, borrowers will soon have to start repaying their bills.
Federal loan payments paused and interest rates were reduced to zero percent in March of 2020.
“It’s been pretty great, I had a child around then, so it helped a lot that they were paused,” said borrower Snowden Abid.
But, the debt ceiling deal made last week ends the federal loan pause on June 30. People would have to start paying their loans back 60 days after that date.
“We are not being paid enough to worry about student loans and have a good way of living,” Abid said. “Being able to pay electricity water, housing, kids.”
Old Dominion University economist Bob McNab said federal leaders had always planned the pause as a temporary COVID-19 pandemic relief measure.
“At the end of the day what this means is that you are going to have to get your pocketbook ready,” McNab said.
McNab said this will change the lifestyles of some borrowers who have had an extra $200 to $500 to spend each month.
“Do you no longer buy a house? Do you no longer live in an apartment? Do you live with your parents? Do you have a roommate?” McNab asked. “Those are all conversations some people are going to have to have in the coming months.”
His advice? Don’t ignore the upcoming due date.
"So, you have to look at your budget now and go back and say, 'Can I afford more than the minimum payment? Can I aggressively pay this off?'” McNab said. “'Can I look at my debt and move this up in terms of prioritization to get out from underneath student loans?'"
Federal Loan provider Nelnet said people should update their contact information with their specific provider and watch for payment notices.
Zelma Stokes said she plans to start saving.
“The cost of living and everything is up, so just another bill that gets added, has to get paid,” Stokes said.
McNab said in the big picture, the repayment of federal loans will shave off some consumer spending, but he said with the chances of a recession this year dimming, the economy can handle the impact.
The Supreme Court is expected to rule on a lawsuit brought against President Joe Biden’s student loan forgiveness plan that would cancel up to $20,000 of Pell Grant debt and up to $10,000 of federal debt later this month or early July.