Student-Loan Repayments Are Resuming Soon. Are You Ready?
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Here's your money briefing for Tuesday, February 8th. I'm J.R. Whalen for The Wall Street Journal. After more than a two-year moratorium, people with federal student loans will have to start repaying them come May 1st. That may seem like a long ways away, but with no further extensions currently on the table in Washington, borrowers need to develop a game plan now.
Make sure your address and everything is correct. Make sure you know what your monthly payment will be. You just really have to be on top of this.
On today's show, WSJ contributor Cheryl Winokur-Monk will take us through the steps that student loan borrowers can start taking to get ahead of those monthly student loan bills coming back. That's after the break.
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What key deadline should federal student-loan borrowers know about for May 1st?
Federal student loan repayments are scheduled to restart on May 1st. That's still more than two and a half months away. But how can you prepare now for that monthly expense to kick back in after a two-year break? WSJ contributor Cheryl Winokur-Monk has been covering student loan economics for us, and she's here with some tips. Hey, Cheryl, thanks for being with us. Thanks for having me. So first off, Cheryl, give us a quick update. There's been talk over the past few weeks about possible student loan forgiveness, maybe even another extension on the repayment moratorium. Anything new on that?
As of now, there is nothing new. But these things can change very quickly. After all, before they did the extension, the government had said it was going to be the last extension. And then, of course, they extended it again through May 1st. So anything's possible. But the point is, is that because we don't know the future, borrowers really do need a game plan.
Okay, so let's look ahead to May 1st when loan repayment is scheduled to resume. The economy is a lot different now than it was when people with federal student loans last had to pay them. So what kind of environment are they going to be finding themselves in on the other side?
Well, consider that inflation in December was 7%, and that's compared to 1.5% in March 2020. So obviously, costs are up a lot across the board. Just go to the grocery store and you come out with a bill that's significantly larger than it may have been several months ago. That said, it's possible people got pay raises. There's all different kinds of factors that could affect people. But in general, costs are up across the board, and it may be harder for some people to repay their loans once the extension expires.
Yeah. So given that, what kind of changes in their finances or their daily lives could some people who are still struggling be facing once these payments come back?
Well, there are some obvious steps that some borrowers may have to take. There may be some things they have to do, such as finding a higher paying job, taking on additional work. Some may even resort to selling personal belongings or finding less expensive housing. You could even borrow from family or friends.
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