KANSAS CITY, Mo — Interest on student loan payments resumed Sept. 1 and after more than three years, borrowers will have to make payments again starting in October.
“When we found out, you know, they’re probably not gonna be extending again, it definitely gave me some of that anxiety,” said borrower Andrew Corrao. “I’ve done about 27 payments on some of my loans for my undergrad work, but to this day I still have about $40,000 of student loan debt.”
Growing up in a single-parent household, a chance at higher education meant taking out loans. And like many others in their 20s, he changed his major, which meant more money to start again.
On top of that, he returned to school for a master’s degree in education.
“Unfortunately being an educator, not a ton of extra income around here to be able to pay out of pocket,” said Corrao.
When Corrao first started teaching, his salary was $40,000. His current debt that he has accrued is equal to his first year’s whole salary.
The payment pause during the pandemic gave him a financial safety net over the last three years. But starting next month, he will be spending an additional $300 to $400 a month, even with the help of a payment plan.
“That is piano lessons, that is dance lessons for my kids, that is a vacation. All those things that I’m not gonna be able to spend money on for them,” said Corrao. “Well, how does the student loan debt that I have impact my ability to make sure that they’re having a good childhood?”
Many borrowers like Corrao were disappointed when the Supreme Court struck down the Biden Administration’s student loan forgiveness program.
Jason Anderson, a student loan advisor, says now is the time to make a plan.
“I tell borrowers to go to the student loan simulator on the Department of Education website. They can plug in their information and it will tell them what different plans look like for them,” said Anderson. “Pay As You Earn is still around, IBR, Income-Based Repayment, Income Contingent Repayment… Depending on the types of loans you have, you may only qualify for one or two or none of those plans, so you have to see what qualify for.”
And as of this August, a new federal program called “SAVE” is an option as well.
“It’s a great plan, especially for undergraduate borrowers. For undergraduate borrowers, it’s only five percent of your income that’s gonna be put towards your student loan payment. If you have graduate debt, that can be between five and ten percent,” said Anderson. “For those that have taken out a small amount of money for undergrad, you might even get forgiveness after as quick as ten years.”
As the payments resume, Anderson says borrowers may notice two alarming changes: your service provider and the amount of money you owe.
“We’ve had servicers that have exited that business, so we have new servicers that have taken on borrowers that they haven’t had previously,” said Anderson. “It is a red flag to get something from an entity that you’ve never heard of before, but a lot of those are legitimate because servicers have been switching. Some have been taking on borrowers from folks that went out of the business. So, that’s not something I would necessarily be concerned about as long as you vetted it and you’ve actually went to the servicer website.”
Anderson says the amount you owe may have gone up because your income may have changed or because of a mistake by the servicer.
“Servicers are so backlogged. You’ve gotta understand, they’re trying to train all these employees and so a lot of times they make mistakes,” said Anderson.
It is not uncommon to be put on hold for hours to reach a representative, so Anderson advises borrowers to call early.
Corrao says while these financial assistance programs are vital, the long-term solution is breaking down barriers to higher education from the top.
“If America can’t figure out how to get more students into higher ed, we’re gonna fall further and further behind with the rest of the world,” said Corrao.
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