By Tony Guerrero
Hays Post
The freeze on federal student loan payments put in place during the pandemic ends this fall.
While on the federal level, new relief programs are being debated, some programs already exist. But as payments resume, the full impact on borrowers and the economy is yet to be seen.
The resumption of payments will impact both current and former Fort Hays State University students.
Holly Younger graduated in 2012 and still owes a considerable amount to repay her student loans but said she wouldn't have trouble paying them off thanks to existing government repayment programs.
“My loans are based on my income, and I have never had an issue with making the payments,” Younger said. “As for managing the debt long term, after a certain period of time, the debt is forgiven as long as you're on an income-based repayment (plan) for that long.”
With the end of the three-year pause put in place during the pandemic, over 40 million Americans will have to make payments again.
Interest on the loans resumes September 1, and payments will resume during the month of October. Failure to do so results in damaged credit ratings and prevents access to additional aid and government resources.
And bankruptcy for the vast majority of borrowers does not eliminate the debt.
Falling behind on a loan by 270 days will cause the loan to appear on a credit report as being in default. Once in default, the government intercepts tax refunds, garnishes wages and confiscates portions of Social Security checks and other benefits to collect on the debt.
But for those that were in default before the pause was put in place, a program is available to help.
President Biden’s Fresh Start program is currently accepting applications and will help those borrowers become current as payments become due. Participants will be relieved from the most serious negative consequences of default and can apply for federal student loans in the future.
The Fresh Start program also applies to missed payments bringing the loan current.
Younger said passing additional loan forgiveness laws will help future generations succeed.
Regardless of the pause being lifted, she said she is prepared to make payments again.
“I was hopeful for some kind of forgiveness,” Younger said. “Even it wasn't for me. I feel like it would help make life better for those who are young and struggling. I'm ok, but I know a lot of people who aren't, and it's sad.”
Current FHSU student Tereus Henry said he's attempting to mitigate the amount of loans he is taking through good financial decisions and encourages peers to do the same.
“Be smart with your money. Make sure you know what you can spend and what you can't,” he said.
But Henry thinks the government should be offering more assistance to those with student loan debt.
Younger encourages high school graduates to consider their options before committing to anything long-term, as well as talking to past graduates in their field.
Although it would be years before she returned to college after finishing high school, she was unaware of how taking out loans would affect the rest of her life.
“I don't regret my degree, but I 100 percent regret how I obtained it,” Younger said.