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HAMPTON ROADS, Virginia – For student loan borrowers like 19-year-old Synere Swinson, time is running out.
“It’s going to be stressful, but I was made for it,†he said.
Swinson is a second year student at Norfolk State University who aims to become a chiropractor.
Since March, he and millions of other student loan borrowers have had their repayment plans frozen.
Swinson has also put his education on hiatus. The small business owner hopes to make money at his new SynFul Wings restaurant in Greenbrier Mall at least make a dent in paying off its growing debt.
“I have bills to pay and stuff, so the company is helping me adjust my schedule a bit, which is why I took a break and will be back next semester,” said Swinson.
The federal government has suspended student loan payments amid the COVID-19 pandemic, but the Cares Act relief period ends on January 1, 2021.
“At the end of December, we’re going to face a financial shock,†said Bob McNab, Ph.D., professor of economics at ODU.
McNab said that over the past decade, student loan debt has been the fastest growing debt in the country after mortgages.
“People have accumulated student loan debt at a faster rate than auto loans, payday loans, credit loans,†he said. “Rising tuition fees and relatively stagnant incomes have led people to rack up debts that now we are in a recession making it harder to pay off.”
Student debt is a burden that weighs heavily on households and the economy.
The economy is already weak due to the COVID crisis and will likely be the reason McNab said millions of borrowers might not see the full loan cancellation anytime soon, or another stay unless Congress does not act.
“We will approach 2021 not in desperation, but in growing uncertainty unless there is action in the next month and a half by Congress and the President, â€McNab said.
If Congress does nothing and student loan payments start again, McNab recommends having a plan ahead and putting money aside in an emergency fund.
If borrowers can’t repay their student loans yet, McNab suggests discussing other options with the lender, such as requesting a loan. deferral of payment or prolonged abstention.
“Find out what your program is, what your expected payments are and what relief might be possible,†McNab said. “If you are unemployed or your income has been drastically reduced, don’t wait until the problem becomes so big that your only choice is not to pay off your student loans.”
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