From Pause to Pay: Student-Loan Borrowers Prepare to Resume Payments
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Here's your money briefing for Tuesday, July 11th. I'm J.R. Whalen for The Wall Street Journal. The suspension of student loan payments allowed some borrowers to fill in gaps elsewhere in their personal finances for the past three years. But last month's Supreme Court decision striking down President Biden's debt cancellation plan puts them back on the hook.
Yeah, it kind of feels like a step back from being a full adult. You know, I was able to purchase a new car, start a business, and now I'm going to be limited again with this burdensome payment that I haven't been making for years.
We'll talk to one borrower with more than $20,000 in student debt about his plans to resume payments. Plus, we'll talk to WSJ personal finance reporter Joe Pinsker. That's after the break.
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For many student loan borrowers, the resumption of payments means having to work those payments back into their budgets. But for years, many of them had redirected that money to other areas of their finances. We'll talk with WSJ reporter Joe Pinsker about the big picture in a moment.
What is the episode about and why are student-loan payments resuming now?
But first, 30-year-old Texas resident and student loan borrower Trey Watson joins us. So, Trey, before the payments pause in 2020, what did your student loans look like and how much in monthly payments were you making?
Yeah, before the pause, I was making about $400 a month payments. It was minimum $285, I believe, but I paid the extra to try to get them paid off faster. I had $20,500 left when they paused them.
How did you feel each month when you were making those payments?
It just was kind of dreaded, you know? This money could be going towards my future instead of my past.
So when the pause went into effect, how did that affect your finances?
Honestly, it was like a huge burden lifted. At the time, I was kind of burnout with work and not having that commitment. I was able to actually, you know, just quit my job during COVID and stay at home. I was my mom's caregiver at the time, so I couldn't be exposed. And it was just a nice relief to not have to worry about that one extra payment each month.
How did the Supreme Court decision affect Biden’s student-debt cancellation plan?
So what'd you do with that money?
So I started putting it aside first for an emergency savings fund. And then since I didn't have a job, I kind of wanted to start becoming self-employed or be able to keep the remote work thing after COVID. And so I started investing in my own little business where I do marketing on the side. Of course, I do have a full-time remote job, but I do work with a few organizations here and there on the side doing digital marketing for them. I was also able to save up a down payment for a new car. It was my first car that I purchased on my own. My previous one was a gift from my grandma to get me through college and such, and I had it for 10 years. So that was a nice relief and kind of my first big adult purchase I got to make after college.
Now, before President Biden proposed the loan forgiveness plan, were you putting any money away, you know, just in case the payments pause were to end?
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