Millions of Americans began paying off their debts Federal student loans again last October, with monthly payments averaging hundreds of dollars per month. Borrowers had to start cutting expenses, doing extra work and looking for ways to lower their monthly payments.
Megan McClelland, 38, said last year that she started applying for more shifts at a catering company and a winery to supplement her income.
McClelland’s day job is as a counselor at Petaluma High School in California. Payments made for more than three years suspended due to the pandemicShe paid off her car loan and was able to save for the first time. She’ll put the $235 she spent on her car payment toward her student loans, but that still leaves about $270 in her budget that she had to reallocate or earn.
“It has been a great relief over the last few years not to have to bear this financial burden,” she said. “In the next few months I’ll see where I can reduce my budget. It’s probably less about going out to eat and more about working part-time jobs.”
And Justin Cole, 35, of Little Rock, Arkansas, said he doesn’t know how he’ll get the $166 a month once repayments resume. That’s the estimated repayment of about $19,000 in loans he owed for college more than a decade ago.
“I’m already in a mountain of debt and even though I just got a pay rise at work, it won’t come into effect until we’re fully staffed at my GP practice,” he said.
Cole works in the front office of a doctor’s office, admitting patients, managing records and managing payment collection. Some of his other debt comes from medical costs following a car accident early in the pandemic.
“If these loans were forgiven, I could finally work on improving my credit score and actually save money for once,” he said. “If they were forgiven out of the blue, I would be thrilled.”
Unfortunately for borrowers, the Supreme Court rejected a plan from President Joe Biden’s administration Wipe away $400 billion in student loan debt.
How to Get Student Loan Relief or Forgiveness
The Public Loan Forgiveness Program is one of several relief options still available to many people with student debt. After Biden’s original forgiveness plan was rejected by the Supreme Court last July, the White House has said it would use the Higher Education Act to make it happen Notice to more borrowers. It is currently going through a process known as “negotiated rulemaking” to determine the details of this plan.
Other sources of relief for borrowers include: false certification, Defense of the borrower, closed school, Dismissals due to total/permanent disabilityand alternative repayment programs such as income-dependent repayment.
For her part, McClelland said she now spends a lot of time advising high school students on how to avoid taking on burdensome loans.
“When I was younger, I had no financial support, either from my own parents or from school,” she said. “I never understood the long-term effects.”
Although I worked part-time during my school years and afterwards StarbucksWineries and restaurants and consulting – McClelland still has about $38,000 in debt, from original loans of $10,000 for her undergraduate degree and $40,000 for her master’s in counseling at Sonoma State.
“I knew I wanted to go to college, and my parents didn’t have any money,” McClelland said. “I tell kids all the time and openly, ‘As someone who was once in your shoes, I highly recommend finding a way to avoid taking out loans.’ When you’re 17 or 18 you think, ‘Oh sure, I’ll figure it out.’ Then it’s frustrating to still be in that financial situation.”
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The Associated Press receives support from Charles Schwab Foundation for Educational and Explanatory Reporting to Improve Financial Literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
This story was originally published on September 30, 2023.
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