Texans owe $120B in student loans; avoiding repayment has consequences
NACOGDOCHES, Texas (KTRE) - Student loan payments will soon be due for the first time since March 2020.
Payments were paused during the Covid-19 pandemic and the interest rate on student loans was reduced to zero.
Now, after more than three years, the bills are due.
“It is stressful to think about, like, if you can’t find a job in six months after, like, I don’t know what’s going to happen to me, you know?” said student Tiara Cooks.
According to Educationdata.org, $120 billion in student loan debt belongs to Texas residents. 20.3 percent of Texas borrowers owe $20,000 to $40,000, on average.
“When that time comes and I get the money, I will pay it back because I know some family members that’s still getting them phone calls, so I don’t want to have to deal with that all my life,” said student Bria Fields.
A survey conducted by intelligent.com found that 49 percent of borrowers say they won’t be able to afford payments, which can be upwards of $371 a month.
“You’re always going to be like a little intimidated by it, but hopefully with careful planning and smart decision making we can pay them off and get it done right,” said student Daniel Mandigo.
The U.S. Department of Education reports that 43.4 million borrowers have outstanding federal student loan debt.
Debt attorney Leslie Tayne says the federal government will have recourse.
“The federal government with the student loans does have the right to take your tax refund money and they can even garnish social security. So, you’re only hurting yourself in several different ways by not making the payments. One, you’re hurting your credit. Two, the balance is going to go up,” said Tayne.
Tayne says there are other options for borrowers who can’t afford their monthly payment, the SAVE plan in particular.
“The SAVE plan is income-driven repayment; it’ll be based on what your income is. You actually could see your payments go as low as zero. The challenge is when you don’t make any payments, the balance will go up.”
Federal student loan borrowers looking to apply for an income-driven repayment plan can click here to go to the website.
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