COLORADO SPRINGS – Student loan debt is a problem many Americans face, but the Education Department again extended the hiatus on federal student loan payments last week. Payments will resume in October 2021.
News5 spoke to an expert at the University of Colorado Colorado Springs about why the federal government made the move and what college graduates can keep in mind to stay on track.
According to Tatiana Bailey, director of the UCCS Economic Forum, there is nearly 1.7 trillion in student loan debt in America, but the problem as a whole is not new.
“Even in good times, before COVID-19, one in seven borrowers were 90 days behind on their loans,” Bailey said. “About 2/3 of them are stalling, in other words, they were barely paying the interest and not reducing the principal on that debt.”
Bailey said the student loan debt problem had increased during the pandemic, which is why President Joe Biden ordered the Department of Education to suspend student loan payments.
“The government knows that young people, in particular, can be hit harder because they don’t earn as much,” Bailey said. “Putting it all together is probably a good decision from a financial stability standpoint, not only for members of households with student loans, but also for the federal government.”
Carina Mezayek graduated in August last year amid a pandemic. She is one of the many people whose jobs have been affected and loans deferred with an interest rate of 0%.
“I had been transferred part-time with my job. There was just a lot of insecurity and that’s why not paying helped,” Mezayek said. “It also helped my lifestyle so I could focus on utilities and
locations, since my job has been affected.
What should borrowers like her do now? Bailey recommends taking advantage of 0% interest without wasting money, prioritizing your bills, and continuing to pay off your loans if you can.
“We were able to recoup our full-time hours, so starting next month I want to recoup those payments, that way I’m not too much left behind,” Mezayek said. “I just hope that in the future there won’t be any major changes that will make it harder to pay off everything.”
Bailey also said that if you are considering refinancing your student loan, ask lots of questions and pay close attention to the interest rate. You could end up paying more in the long run.
If you are considering graduate school, it is also recommended that you learn as much as possible about the field, such as the number of vacancies and the base salary.