EAST LANSING, Mich. (WLNS) — Nearly 44 million people have federal student loan debt in the United States. While many breathe a sigh of relief as student loan repayments have been postponed until the end of April, what might the economy look like when people have to start making payments again?
“When that happens, I could pay for the unsubsidized and the subsidized; the one that has no interest, but I don’t really focus on that because I’m still in school,” said Julia Lee, a third-year student at Michigan State University.
She said all of her student loans are federal. Since she’s still in school, Lee said she wasn’t too concerned about the start of the payments. But his graduate friends think differently.
“With my friends I think they’re a bit stressed because they still have to like paying for other things and now that since they got out of school they don’t have any other funds economic or similar grants that they can easily access them,” she said.
Lee said some of his friends are choosing to save now and increase their payment plan amounts after a deferral.
According to MSU economics professor Eric Scorsone, about half the country is spending on current needs and other expenses rather than paying off loans during the deferment. Something that could be seen in towns in central Michigan.
“There are probably tens of thousands of dollars that are diverted to some kind of consumption and again, probably an equal share going to either savings or perhaps payments,” he said.
He said the student loan problem is not just for students and graduates, but also for parents. Scoresone said there could be a drop in spending nationwide once student loan repayments start again.
“I don’t know how big it will be, we’ll have to see honestly. But there will be some impact because we know student loans are a big burden,” he said.
The future of federal student loans still remains unclear in Washington. But for now, the last adjournment extension ends on May 1, 2022.
