APPLETON, Wis. (WFRV) President Biden has provided some short-term relief for millions of federal student loan borrowers but some borrowers who say that’s not enough.
Nearly 41 million borrowers are getting some help with their loans after President Biden temporarily froze payments on federal student loans.
Kim Donat, the financial aid director at the University of Wisconsin at Oshkosh says, “Basically there’s a pause on paying the interest and also nothings going to happen with their student loans so they have through the end of September where they would not have to pay on their student loans and no interest is going to accrue those are good things.”
Chrissa Peterson, has student loans and says, “I think that the student loan payments are definitely down on the list of things that people need in the exact moment and people are really suffering.”
When payments resume on October 1, borrowers say the already accrued interest on their student loans makes it impossible to pay down their debt.
Peterson says, “I’ve paid a significant portion of my student loans but it hasn’t covered even the interest.”
Carrie Holley-Hurt has student loans and says, “Sometimes I would be paying a couple of hundred bucks and sometimes I would be paying four hundred bucks the interest was growing so now its like $9,000 more than what I took out to go to school initially.”
Scott Buchanan, Executive Director of Student Loan Servicing Alliance]- 4:01- so now is a great time to have that conversation with your servicer about what’s the right repayment plan to be in and when we come out of this and this is the time to do that without any pressure to worry about making payment tomorrow
Buchanan also warns the total life of your loan will be extended by the duration of this payment freeze.
Buchanan says, “If you were planning to pay off your loans, by let’s say, 2025 or 2030 this will add some extra time to pay back that loan but because interest is non accruing on those loans that doesn’t necessarily have a financial impact.”
Buchanan also says it’s wise to aside some cash for emergencies.
Holley-Hurt says, “We just take that money that we would have paid and just every month just stock it. We just put it into savings. We’re just trying to do the best we can to financially insulate ourselves and pray that they do something.”