Americans Concerned About Student Loan Repayment

(TargetDailyNews.com) – Americans are increasingly concerned about their inability to repay student loans after payments have been suspended for three years. A third of those polled also stated their expectation that their debt will remain with them through retirement.

Nationwide student loan debt payments were paused from March 2020 until the end of September 2023. As of October borrowers were expected to resume making regular payments. The multi-year pause was initially enacted due to the economic fallout of disastrous pandemic policies.

The new data comes from MassMutual and suggests that as many as 3 out of 5 borrowers are contemplating bankruptcy to eliminate the debt.

MassMutual chief financial planner Paul LaPiana indicated that some borrowers were spending money paying down their debt rather than spending on exorbitant holiday gifts.

The Federal Reserve suggested most borrowers pay $200-300 a month, and JP Morgan analysts said that the total volume of monthly payments is roughly $10 billion.

Americans resuming payments are reporting negative health consequences in staggering numbers. Seventy-six percent of those polled by MassMutual reported a negative impact on their health.

Some are offloading the debt through bankruptcy. The Department of Justice recorded 632 borrowers using bankruptcy to eliminate their debt from November 2022 through September 2023. It’s an uptick from years prior when roughly 400 people used a similar mechanism.

The Biden administration approved a rule change that made it easier for borrowers to ditch the debt with bankruptcy. The changes were made in November 2022 to avoid “time-consuming investigations.” The prior standard was a necessary demonstration of “undue hardship” from carrying the debt, now borrowers can use bankruptcy if they meet three criteria.

The new criterion is an inability to pay now, or in the future, and the demonstration of a good-faith effort to repay it.

Associate Attorney General Vanita Gupta published a press release on November 16th that hailed the rule change as a success. She said it simplified and improved the process for folks going through bankruptcy and was “thrilled” to have made an impact.

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