More than 36 million people with federal student loan debt have not been required to make a payment for more than two years, but that may soon change.
A moratorium on federal student loan payments took effect in March 2020 and has been extended three times, with a current expiration date of May 1.
Rome Busa, director of adult programs and services at College Now in Greater Cleveland, pointed out that with the average Ohio University graduate facing an average debt of around $30,000, the benefits of the freeze have been huge for borrowers.
“Now the flip side is that while it was a break in the burden of repayment, it didn’t completely undo or remove it,” Busa warned. “So at some point action has to be taken both from the borrower’s side and from the federal government’s side. Right now everything is at a standstill and no solution is really offered.”
There are calls for the Biden administration to provide federal student loan forgiveness before the break expires, or to extend the moratorium, as Americans are now battling inflation as they struggle to recover from the pandemic economic losses. Private lenders, who are not covered by the moratorium, claimed it was unfair to borrowers who did not need it and argued that it lowered demand for their products.
Busa said there is also talk of changing federal loan interest rates and other policies to make sure the calculations are fairer.
He thinks the most important thing is to tackle the high cost of college education. The average cost has more than doubled since the turn of the century and is now around $35,000 per year.
“If costs continue to rise, student debt will also continue to rise because people need education to grow and build careers,” Busa said. “That need to educate yourself is never going to go away.”
In the meantime, Busa urged borrowers to prepare for the resumption of payments and to consider options for reducing payments. These include the cancellation of civil service loans and income-based repayment plans.
“And all of them have different calculations, all based on their income, which helps lower those payments,” Busa pointed out. “It’s possible to have a zero dollar payment under one of these income-driven plans. And those zero dollar payments actually count as a qualifying payment for their student loan.”
He added that College Now and other partners across the country can help student borrowers navigate the loan process.
Reporting by Ohio News Connection in association with Media in the Public Interest and funded in part by the George Gund Foundation.
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