Millions of Americans strapped with student loan debt are still not paying their bills after a three-year payment hiatus ended this fall.
Federal student loan payments restarted at the beginning of October after President Biden declined to extend the pandemic-era pause that first began in March 2020 under his predecessor, former President Trump.
However, 40% of the 22 million borrowers who had bills due failed to make a payment as of mid-November, according to a new report published by the Department of Education. That means about 9 million Americans who have payments due are not making them.
The figure does not include borrowers who are still in school or who recently left and do not yet owe payments, or whose payment deadlines were extended due to loan servicing errors.
MORE STUDENT LOAN BORROWERS ARE FILING FOR BANKRUPTCY TO OFFLOAD DEBT
“While most borrowers have already made their first payment, others will need more time,” Education Department Under Secretary James Kvaal wrote in the report. “Some are confused or overwhelmed about their options. We want to make sure borrowers know that our top priority is to support student loan borrowers as they return to repayment.”
Although payments did not officially restart until the beginning of October, interest began accruing again on Sept. 1. As a result, borrowers who do not make payments now will see their payments continue to grow.
MANY STUDENT LOAN BORROWERS UNSURE HOW THEY’LL RESTART PAYMENTS AFTER PAUSE ENDS, SURVEY SAYS
The average monthly bill hovers between $200 and $299 per person, although it is even higher for some borrowers, according to the most recent Federal Reserve data.
Collectively, borrowers resumed paying about $10 billion a month in October, according to a separate analysis from JPMorgan.
The resumption of student loan payments comes as consumers continue to face sky-high interest rates and chronic inflation, which has rapidly eroded their purchasing power. Experts say the addition of student loan payments could deliver a financial shock to millions of Americans – and hinder their ability to shop at big-name stores like Target, Nike, Under Armour and Gap.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Many borrowers hoped that their loans would be wiped out, but the Supreme Court earlier this year struck down Biden’s student loan forgiveness plan that would have erased up to $20,000 in loans per borrower.
Since then, the White House has announced other efforts to reduce student loan debt, including erasing $127 billion of debt owed by about 3.6 million borrowers.
Read the full article here