Mortgage

A taste of student loan forgiveness? Borrowers describe ‘freedom’ before payments resume

A taste of student loan forgiveness? Borrowers describe 'freedom' before payments resume
Written by Publishing Team

In the morning before you start Amanda Leaders from Saint Petersburg is at her software development job, sitting over coffee and thinking who to send a postcard to.

The hobby started in September when I noticed a sale at Vistaprint. She ordered a set of postcards with a black background and plain white typeface: “Hello, cancel student debt, please.” And below it in smaller letters: “No, really, do that.”

The leaders sent cards to the White House, the US Secretary of Education, and all nine offices of Senator Marco Rubio. It’s her way of dealing with the news that the federal moratorium on many mandatory student loan payments and interest will end soon. It is a last-ditch effort to preserve the quality of life that she and others say they have tasted student debt away.

For some student loan borrowers, the pause that began with the CARES Act in March 2020 has been a rare silver lining in the pandemic. Those who spoke to Tampa Bay Times Without that burden, they felt closer to the adult life they expected with a college degree: savings accounts. Mortgages. Christmas gifts without having to extend their debts.

The pause was due to expire after January 31, 2022. On Wednesday, after this story was first published, the Biden administration said it would extend the suspension of loan payments until May 1.

Related: Student loan payments pause extended to May 1

Devin Dominguez, 39, a 39-year-old Tampa woman, said millennials have been buying their first homes during the pandemic as if they were a baby boomer, paying off an additional $500 a month in other debts. She bought an apartment after her credit score jumped 120 points.

The Federal Reserve estimates that the average monthly student loan repayment is $393. The total student debt in the United States is about $1.75 trillion. The Department of Education estimates that borrowers saved $5 billion per month on interest during the pause.

With interest, some borrowers make payments for years or decades without seeing their balance shrink.

Earlier this month, with the clear end of the deferral approaching, borrowers said they You feel dread, unwell, or meaningless.

“I’ve had this sense of financial security and comfort from this thing that has been preventing me from … having any kind of freedom for years,” said Andrew Williams, a 31-year-old urban planner. Williams was recently fired from his job, after a dispute over what he said he promised would allow him to work remotely.

He said that the pause in payment allowed him, for the first time since graduation, to calmly search for a really suitable job, without “despairing” of paying $1,100 a month. With money that usually goes to the student loans, bought his first stock and said he saw a fivefold return. “I was excited and optimistic. But I’m about to turn back.”

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The leaders, who owe more than $42,000 in loans from her undergraduate and graduate degrees, finally fixed the roof of her home, which has been leaking bread pans on the floor since Hurricane Irma in 2017. She stopped worrying about her grocery bill. She can afford emergency medical care for a pet.

The idea of ​​having a baby someday, or at least not dying of debt, seemed fleetingly possible.

In early December, towards the end of the pause, she was sending out postcards and thinking again about the grim jokes she and her friends had told before the vaccinations: “Well, if we kill the coronavirus, we won’t at least have to pay our student loans.”

Amanda Leaders, a software developer in Saint Petersburg, has seen some financial stability after student loans were temporarily suspended.  She's calling for loan forgiveness, sending postcards to the White House and Florida leaders.
Amanda Leaders, a software developer in Saint Petersburg, has seen some financial stability after student loans were temporarily suspended. She’s calling for loan forgiveness, sending postcards to the White House and Florida leaders. [ MARTHA ASENCIO-RHINE | Times ]

Generation gap, mental burden

If the promise of college is access to America’s land of plenty — a stable career, owning a home and a car, travel, the ability to provide for the family, care for parents and eventual retirement — it remains unfulfilled for many.

The oldest millennials turned 40 this year. Compared to baby-boomers in their 40s, they are less affluent, less likely to own stocks and less likely to own a home, according to a recent Bloomberg analysis of Fed data. Wages have not kept pace with housing and living costs.

The majority of student debt in the country is owed by Millennials, who were born between 1981 and 1996, and Generation Xers, born between 1965 and 1980, according to the Education Data Initiative. Millennials owe an average of $38,877, while Generation X borrowers owe an average of $45,095, according to that data. More than 6 million baby boomers also have student loan debt, with many taking out loans for their children’s education.

The Student Debt Crisis Center said its latest survey of 33,703 borrowers showed that 89 percent say they are not financially secure enough to start making payments after January 31.

“I think we’ll go back to where we started, in the same mess it was two years ago,” Jason Hall, an associate professor of sociology at Dartmouth College who researches student debt, said of the end of the moratorium.

“There is a lot of evidence to show that loans really do shape the transition into adulthood” and delay those milestones in different ways, Holley said. “Ultimately, it makes people miserable. They sleep worse, have worse mental health, and have worse physical health.”

Tampa-based Sydney Gillian owes nearly $70,000. She said that with no other way to pay, she took out loans, because she had known all her life that a college degree was worth it at almost any cost. When she couldn’t find a living wage with a degree in Childhood and Family Services, she started working for her second bachelor’s degree, in business, before the pandemic.

She started a job in human resources in 2020, earning a lot more than she was doing as a preschool teacher, but she’s terrified knowing how much life-improving income will be swallowed up by large income-based loan payments when they return. .

Gillian, 27, said: “It was really cool not thinking about them for two years. After I got an alert saying they were starting soon, I kept thinking, ‘How do I get rid of them?'” “”

Holly said many of those unable to repay the loan balances are first-generation college graduates who can’t turn to their parents for help. “They were supposed to be the ones to turn things around for their families, which their families could come to for money,” he said.

Sociologists thinking about mental health, Holley said, weigh the importance of stressors from events, such as divorce or job loss, which are ephemeral, versus chronic stressors, which are inevitable things people wake up daily. “That’s what student religion is,” he said, “that’s what really bothers you.”

Holly said the extended standstill could be useful to researchers who have long wondered what would happen if student loan debt disappeared overnight.

“Sociologists are always looking for natural experiments,” he said. “There is some potential there.”

He also sees it as evidence that the federal government has the ability to take action, whether that’s a drastic change such as debt forgiveness or smaller changes, such as automatically enrolling borrowers in income-based payment plans or making them more affordable.

“A pause that showed the government could do it with the touch of a finger,” he said.

Return of payments in 2022

President Joe Biden carried on Support the cancellation of at least $10,000 of student debt per person. Nearly a year into his term, he has not acted on that pledge or on calls from some Democrats to cancel up to $50,000 in student loan debt through an executive order.

Florida Senator Marco Rubio, like many Republicans in Congress, opposed repeal as an unfair drain on taxpayers, but acknowledged the need for reform. He referred to the “insurmountable debt cycle for the postgraduate years” in August when he introduced legislation that would eliminate interest on student loans and make income-based repayment automatic.

Carrie Robaldo, an artist and director of an advertising agency in Bradenton, said the hiatus allowed her to help her mother, who had lost much of her remote control. The work of teaching students in China this year. The $300 that Robaldo paid each month in loans went to her mother’s home payments. Her mother said that she is still struggling to find work and get back loan payments, she is desperate.

She said she thought education would secure her future, “but having been through more than half of my twenties at this point and still on the struggle bus, it’s hard to believe it wasn’t a lie.”

Philip Belcastro, a 34-year-old English teacher at St. Petersburg High School, faces uncertainty: After graduating, he earned low wages at nonprofits and had his loans deferred; Now with a higher income, he’ll have to start making payments when the pause ends. not know how much.

He feels like his generation is walking through the water and waiting to be crushed by the next big wave.

He teaches texts about the dangers of the American dream – Of mice and menAnd A raisin in the sun And he tries to give his students hope, even if he has little hope.

“Are they finished?” asks himself. “Do I have rooms full of 16 year olds who have just checked out?”

Trampling on water seems right for Jacqueline Madison of Saint Petersburg, who is married and a mother of three. She made payments on her initial $18,000 loan for 14 years. Today, after interest, it’s $25,000. This is a common experience for borrowers who make lower payments based on income, which helps prevent defaults but can end up mostly towards interest.

Madison took advantage of working in restaurants for seven years after graduating with a degree in psychology, then took out another $50,000 in loans for graduate school. It paid off, and she made a lot more money in IT, but her $850 payment kept her family from saving anything for retirement.

With the hiatus, she saved money, and at the age of 35, made her first ever contribution to a 401(k). “I’ve never had a savings account with more than $8 until my downtime,” she said. She said that when payments resume, her contributions will stop.

Leaders, the software developer, has spent the past few years calculating how you can have a baby as a single woman. Her bar was always whether she could afford childcare. She said she realized during the pandemic that she could finally — but only if the loan payments were not returned.

One of her loans was not covered by the layoff, and she said she fell behind on repayments over the summer. The company offering her loan immediately began calling her six times a day. The black cloud is back. If someone like her, with a good job and generational wealth, couldn’t make her way out of student loans, I wondered, how could anyone?

You toyed with the idea of ​​not making payments when the pause ends. She wonders how long it will take loan providers to sue.

“I feel like I’ve been paying on this forever and I’m going to keep paying for it forever,” she said. “So what’s the point?”

Times co-producer Annella Lego contributed to this story.

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