Millions brace for a return of student loan payments

Millions of student loan borrowers are bracing for the return of a dreaded monthly burden: the student loan bill. After a nearly three-year payment pause put in place during the pandemic, student loan payments are set to resume beginning New Year’s Day, 2023.

Student Debt Pay Pause

Where will that money come from?

That’s a worrisome question for borrowers like Bonnie Weiler-Sagraves, a national board-certified teacher at Atlantic High School in Port Orange, Fla. “I would have to find the money somewhere, which means I would have to either cancel my life insurance policy or something else,” says Weiler-Sagraves, who carries $62,000 in student debt.

Prolonging the pause?

The student loan payment pause was activated in March 2020, when workplaces and college campuses shut down due to the pandemic. It included a freeze on interest and was extended multiple times to accommodate ongoing hardship due to COVID-19.

The pause was a tremendous help to people like Weiler-Sagraves, who lost income during the pandemic. The work she normally did to supplement her teacher pay—tutoring, teaching Saturday school and teaching an extra period—was unavailable while children were at home learning. On top of that, she could no longer attend the meetings and classes she needs to renew her teaching certificate. She had to enroll in an expensive college class instead.

These sorts of pandemic-related circumstances have compelled some educators to leave the profession, says Weiler-Sagraves. “The district is forced to use anyone who they can find, even if they are not qualified for the job, because there are so few people interested in teaching these days.”

Meanwhile those loan payments still hover—though some student debt analysts say the pause could be extended again. Speculation is partly tied to President Joe Biden’s student debt cancellation plan, announced in August 2022.

That program, which is separate from the payment pause, would completely erase $10,000 in student debt across the board—and for those who received Pell grants, $20,000—as long as the borrower’s income does not exceed $125,000. But conservative Republicans filed a lawsuit against the program. Now a Trump-appointed judge has ruled the program illegal, an appeals court granted a preliminary injunction and all relief has been delayed.

The program was well underway when the lawsuits were filed: 26 million people had already applied and 16 million of them were approved for relief. The Biden administration estimates that 40 million borrowers are eligible for the relief, and tens of thousands could have their entire debt burden erased.

This legal limbo raises important questions about the wisdom of restarting payments in January for people whose entire debt should be forgiven, per policy that has already been issued.

Meanwhile, the case is being appealed. It may wind up in the U.S. Supreme Court.

What would relief mean?

Debt relief advocates are hoping Biden’s relief plan survives and that changes to the Public Service Loan Forgiveness program continue to help borrowers who are public service workers: Alleviating the nation’s $1.7 trillion student debt is the goal here. But what does that mean on an individual level?

Many people would be freed up to get the medical care they’ve put off. They’d be able to start families, advance their careers in the directions that inspire them most, buy homes, and be freed from debilitating financial insecurity that has held them back from living their fullest lives.

“If I didn’t have this student debt burden, I could be certain that I will be able to care for my parents as they age,” says Nicole Brun-Cottan, a physical therapist working with acute-care hospital patients. “I could save adequately for my own retirement. I could EASILY make a mortgage payment on a perfectly respectable house.” Instead, a year ago Brun-Cottan was relying on relatives for housing, and today she is dreading the return of loan payments.

It’s been a rough three years for Brun-Cottan, who endured the nightmare of COVID-19-filled ICU and emergency room units. “I’m exhausted,” she wrote, recounting her story a year ago. “We’re all traumatized. We’ve seen so many people die.” She wasn’t sure how much longer she could continue working at this pace.

Part of what has kept her at the job—besides the fact that she cares about her patients and colleagues—is the requirement that she work for five more years before she qualifies for Public Service Loan Forgiveness. Separate from the Biden relief program, PSLF relieves all remaining debt for people who work for her.

PSLF would also be welcome for Weiler-Sagraves, but several loan servicer errors have prevented her from qualifying.

For Brun-Cottan, staying at her job is still a struggle. “I work in a system that is in total collapse, and I have spent the past three years watching us fail our patients and our colleagues,” she says. “Healthcare is in freefall in this country. Sick people need help, and there are not enough of us to help them.

“Healthcare organizations have capitalized on the crises in any way that they can. The quality of care has deteriorated to the point of incoherence. Every single day on the hospital floor I see terrifying things happen because we don’t have the resources we need, and the people providing the care are totally exhausted.”

Brun-Cottan fears for the future of the profession. “I cannot in good conscience recommend to any young person I know that they incur debt for the gift of involving themselves in this mess,” she says. “I used to guest lecture to the first-year doctoral students. … This year I declined to lecture because the only thing I have to say to anyone who wants to enter healthcare right now is, ‘Have you considered what your other options are? Whatever you have considered, do that instead.’” 

Widespread dread

Brun-Cottan and Weiler-Sagraves are hardly alone in their worry over returning loan payments. According to a survey by Savi and the Student Debt Crisis Center, nearly half of borrowers surveyed say they will not be able to afford student loan payments in six months, and nearly all of them are concerned that inflation will make meeting those payments more difficult. SDCC calls the payment pause “a critical lifeline.”

“Our survey proves that the COVID-19 pandemic is far from over for student loan borrowers,” says Natalia Abrams, SDCC president. “Long-term relief, like extending the federal student loan payment pause and debt cancellation, is the only way borrowers will be able to fully recover from lost jobs, health challenges and shifts in the economy caused by the pandemic.”

[Virginia Myers]