Belt-tightening could hurt an economy that relies heavily on consumer spending. So they’ll likely have to cut back on other things - travel, restaurants - to fit resumed loan payments into their budgets. The hit to household budgets is ill-timed for the overall economy, Jefferies says, because the United States is widely believed to be on the brink of a recession.ĭespite the student loan moratorium, Americans mostly didn’t bank their savings, according to Jefferies economist Thomas Simons. consumers $18 billion a month, the investment firm Jefferies has estimated. Resuming student loan payments will cost U.S.
Among those who defaulted in 2021, the median loan balance was $15,300, and the vast majority had balances under $40,000, according to the Federal Reserve Bank of New York. It’s fueled by millions who drop out before graduating, along with others who graduate but struggle to find good jobs. Yet borrowers with lower balances are the most likely to default. Their average loan balance is less than $14,000, lower than any other age group. Out of the more than 44 million federal student loan borrowers, about 7 million are below the age of 25, according to data from the Education Department. “Not because we don’t want them, but because it would be financially irresponsible for us to bring a human being into this world.” “My partner and I agreed, maybe we don’t want kids,” she said.
The financial pinch has them postponing or rethinking major life milestones. Instead, she invited her partner to move in and split rent. Under President Joe Biden’s cancellation plan, Chanthanouvong would be eligible to get $20,000 of her debt erased, leaving her owing $5,000. “And sometimes, I don’t even have $100 after everything.” She found a full-time job last year, but at $70,000, her salary barely covers the cost of living in the Bay Area. She couldn’t find a job for a year, leaving her to rely on odd jobs for income.
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Users can find relevant material quickly with hit-term highlighting and download PDFs of articles or images.“I worry that we’re going to see levels of default of new graduates that we’ve never seen before,” said Natalia Abrams, president of the nonprofit Student Debt Crisis Center.Ĭhanthanouvong earned a bachelor’s in sociology from the University of California-Merced in 2019.
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