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Student loan repayment freeze gives borrowers some relief, but not forever

Students on campus
Posted at 2:19 PM, Jan 05, 2022
and last updated 2022-01-05 15:19:17-05

In the U.S., college graduates owe more than $1.7 trillion in student loans, but the pause on federal student loan repayment has provided some relief for borrowers during the pandemic.

In an uncertain economy, student loans can be a large burden on graduates. Rachel Caldwell, a first-generation college graduate, said the repayment pause has allowed her to put more money towards other things, like kicking off her photography business.

"After six months, I was able to buy myself a new lens that really really helped me elevate my portrait style and helped me be able to grow my business in that sense," Caldwell said.

The average graduate in Texas owes more than $26,000 in student loans. The federal payment pause recently extended from January to May, is meant to keep extra monthly payments from weighing borrowers down.

"This allows them additional time to either get their house in order, so to speak, or to get a job, or to make sure they can survive the pandemic as it goes on," said Rob Tennant, assistant professor of accounting at Texas A&M University-Central Texas.

With less income going towards loans, Tennant said more income can also go towards the local economy.

Pausing the payment, however, may cause problems in the future.

"When it ends, people can find themselves in a difficult spot because they've now reallocated those funds for other elements of their budget," Tennant said.

Caldwell said while people shouldn't put the payments over their own well-being, she said borrowers do have to make some sacrifices to be financially stable once the repayment starts up again.

Repayment begins in May, but borrowers are able to continue to make payments now to cut down on the amount owed later.