President Joe Biden (Photo by Scott Olson/Getty Images)
So, 89% of student loan borrowers aren’t ready to pay student loans beginning February 1, 2022.
Here’s what you need to know.
Student Loans
A new survey from Student Debt Crisis Center, a non-profit focused on student loan debt, found some alarming statistics about student loans and student loan repayment:
- 89% of fully-employed student loan borrower say they aren’t “financially secure” enough to restart federal student loan payments on February 1;
- 21% they will never be financially secure enough to make any student loan payments again; (How to get student loan forgiveness)
- 27% of respondents say that at least 33% of their income will go toward student loans when payments resume in February; (Here’s who qualifies for student loan forgiveness right now)
- 10% of respondents say at least 50% of their income will go toward student loan payments; (These borrowers don’t qualify for student loan forgiveness)
- 44% of fully-employed student loan borrowers said they cannot afford their monthly student loan payments or are in student loan default; and
- 45% of respondents say their financial wellness is currently poor or very poor compared with 25% who said said the same prior to the Covid-19 pandemic.
“…As the economy recovers, even fully-employed student loan borrowers are not financially secure enough to make payments again,” Natalia Abrams, President and Founder of Student Debt Crisis Center, said. “Simply put, Americans with student debt aren’t facing an employment crisis, they are facing a student debt crisis. When the payment pause ends on February 1, borrowers will have the rug pulled out from under them as they work to get back on their feet.”
MORE FOR YOU
Borrowers unaware of major changes to student loan forgiveness
Surprisingly, 36% of nonprofit employees said they weren’t aware of major changes to student loan forgiveness that now makes it easier to get your student loans cancelled. President Joe Biden, who has cancelled $11.5 billion of student loans, has continued to help student loan borrowers and announced major changes to student loan forgiveness, which relaxes rules to qualify for student loan forgiveness. (Here’s who qualifies for student loan forgiveness right now). According to the new changes, student loan borrowers in the Public Service Loan Forgiveness program can count student loan payments for FFELP and Perkins Loans, late and incomplete payments, student loan payments from the wrong student loan repayment plan, and even student loan payments made prior to student loan consolidation. This week, the U.S. Department of Education announced that $2 billion of student loans will be cancelled within weeks. While the Education Department and student loan servicers should be notifying student loan borrowers about the new changes to student loan forgiveness, the survey suggests that at least a cross-section of student loan borrowers aren’t aware of the latest opportunities to cancel student debt. (How to apply for limited student loan forgiveness).
Elizabeth Warren warns against the dangers of ending student loan relief
Credit Sen. Elizabeth Warren (D-MA), a fierce advocate for student loan forgiveness, of warning the Biden administration about restarting federal student loan payments prematurely. (How to get student loan forgiveness even if you don’t work in public service). Warren has said that the Biden should extend student loan relief from the Covid-19 pandemic — which has included temporary student loan forbearance — beyond the January 31, 2022 expiration date. Warren is particularly concerned about financially vulnerable student loan borrowers who may struggle to pay their student loans or experience student loan default. However, the Biden administration has said that federal student loan payments will resume starting February 1, and there will be no extension.
With the end of student loan relief, expect that federal student loan payments will restart on February 1. Are you prepared? Now is the time to evaluate all your options for student loan repayment. Here are some popular ways to pay off student loans faster:
