After a pause of more than three years, payments for nearly all student loans restarted in October 2023. Borrowers must incorporate an average monthly bill of $350 back into their budgets alongside competing financial priorities.
Beginning in March 2020, the worldwide pandemic spurred the federal government to take emergency action to protect the finances of America’s quarantined consumers.
Temporary relief for federal student loan borrowers was among these programs. Interest rates on government-owned education debt were reduced to zero, and penalties for non-payment were suspended.
Analysts say nearly all eligible borrowers embraced this pause, with fewer than 1% continuing to make their regular payments.
Members of the millennial generation are particularly affected. Two-thirds of all student debt in America is held by individuals aged 25 to 49, with nearly 95% earning less than $125,000 annually. Their younger cohorts in Generation Z are not far behind.
With the increasing prevalence of student loan debt, understanding the implications of student loans on home affordability and mortgage qualification has never been more critical. When it comes to homebuying and other home loan possibilities, a Bay Equity loan officer can provide important information.
As payments resume, borrowers can check their loans’ interest rates online at studentaid.gov or with their loan servicer. Some borrowers – such as those with unsubsidized undergraduate loans or facing economic hardship - may qualify for further deferments.
To manage debt, a professional financial advisor can offer holistic strategies on various aspects of an individual’s finances. They may help find workable ways to increase income or decrease liabilities. Preparation can lead to extra savings that can be directed toward homeownership or other financial goals.
Today’s higher interest rates can be a boon to savers. Ask your banker about ways to make your money work for you - including high-interest savings accounts or low-risk Certificates of Deposit.
By taking proactive steps, creating a solid budget, and seeking guidance, student borrowers can adjust to the complex financial landscape, setting themselves on a path to financial security.