For many, this abrupt shift is anticipated to be a financial challenge, given over three years of relief from payments.
As the resumption of federal student loan repayments looms, borrowers have a mere week to ready themselves after a payment hiatus initiated in March 2020
Unfortunately, a significant number of borrowers remain oblivious to available assistance programs. Notably, President Joe Biden‘s Saving on a Valuable Education (SAVE) student loan repayment plan emerged as a key initiative. Its primary objectives are to abolish monthly payments for low-income borrowers, potentially save others over $1,000 annually, and ensure that balances don’t swell due to unpaid interest.
Despite the availability of the Saving on a Valuable Education (SAVE) student loan repayment plan, approximately half of recent college graduates are unaware of its existence, as per a Study.com survey of 1,000 graduates. Even among those who are aware, 48% harbor uncertainties about its efficacy in managing loan payments. Alarmingly, a substantial 70% of respondents did not even apply for the Biden student loan forgiveness plan, which was subsequently nullified by the U.S. Supreme Court. Study.com’s data also reveals that the average student loan repayment debt among college graduates stands at $30,556, evenly distributed across different age brackets.
Additionally, a survey by U.S. News & World Report indicates that merely 30% of student loan repayment borrowers are cognizant of when payments are slated to recommence
While 67% have heard of the Biden administration‘s 12-month “on-ramp” to repayment program, only 31% possess a clear understanding of its workings. In terms of preparation, 37% of college graduates have devised strategies to adjust their budgets. Furthermore, around 29% are actively seeking supplementary employment, while 18% are dedicating time to researching student loan repayment plans.
Automatic payments are being scheduled by 10%, and 9% are exploring options like loan consolidation or refinancing. On average, younger graduates anticipate clearing their student debt by age 40, though this timeline varies based on the level of degree attained. For instance, those with Associate’s degrees envision debt freedom around age 42, while Bachelor’s holders anticipate it by age 39. Master’s degree holders forecast debt clearance around age 42, and those with professional degrees expect it by age 46. Unfortunately, the sample size for Doctorate holders was insufficient to draw a conclusive age estimate.