Americans with federal student loans may be in for a rude awakening.
We're less than two months to go until the federal student loan deferment period ends. After January 31, 2022, millions of U.S. adults will be on the hook for payments for the first time since March of 2020. A new survey by Bankrate found almost 70 percent of federal borrowers say they will have to take additional action just to cover the payments.
“If there’s a lot of people who’ve been carrying student loans for a very long time that are still paying on student loans, that’s worrisome,” Economist Hank Lewis said. “That tells me there are some people out there that don’t manage their finances very well, and we could be seeing a big drop in spending.”
He says a nationwide rise in inflation is another key factor. He says the price of housing and food have gone up, which has had a negative impact on most people's finances.
“You have to eat to survive. You need shelter to survive. That’s what people are going to choose first over paying off student debt that essentially was for something that may or may not be helping them to survive,” Lewis explained.
He anticipates many borrowers will ask for reductions, write-offs, or additional deferments.