If federal lawmakers decline to extend what has been a two-year break from having to make payments on student debt, many households will have to come up with hundreds of dollars more every month.
Without paying their share of the $1.7 trillion in student debt owed in the U.S., households have saved and splurged, Bloomberg News reported Tuesday (Aug. 16).
A study from the California Policy Lab and Student Loan Law Initiative cited by Bloomberg concluded that 44% of individuals required to make student loan payments cut back on using credit cards. The group’s credit scores increased by an average of 30 points, according to the study.
The Survey of Household Economics and Decisionmaking produced by the Federal Reserve Board found that 73% of respondents reported they were “doing at least okay financially,” up from 66% in 2020 and 64% in 2019.
Bloomberg noted that President Joe Biden and lawmakers who might be inclined to give borrowers extensions or wipe debt out altogether are in a politically tough place — they likely would be criticized for giving some Americans a big gift but not others — but borrowers are deeply concerned about the return of required payments.
Jennifer Nagle, a 38-year-old Michigan resident who works in technology, told Bloomberg she went on her first vacation in 10 years once she was able to put off $600 monthly student loan payments. The news service quoted her as having said: “It’s hard to save up money to go on vacation,” she said. “This felt like I could put down a heavy burden and just be.”
Washington State resident Jennifer Le, 30, reportedly told Bloomberg she used the break in payments to help pay for her wedding.
“This loan freeze gave us all time to just breathe and catch up a little and maybe pursue some of these personal or financial goals we have,” she reportedly said. “Maybe if we were lucky, we could splurge a little on little luxuries.”
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