HAMPTON ROADS, Va. – For student loan borrowers like Syncere Swinson, 19, time is running out.
“It’s going to be stressful, but I’m built for it,” he said.
Swinson is a sophomore at Norfolk State University who has career goals of becoming 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 pause. The small business owner is hoping to make some money at his new restaurant SynFul Wings in the Greenbrier Mall to at least make a dent in paying down his mounting debt.
“I have bills to pay and stuff, so the business helps me flex my schedule a little, so that’s why I took a break off and then I’ll go back next semester,” said Swinson.
The federal government suspended student loan payments amid the COVID-19 pandemic, but the Cares Act relief period ends Jan. 1. 2021.
“At the end of December, we’re going to face a financial shock,” said Bob McNab, Ph.D., an economics professor at ODU.
McNab said for the past decade, student loan debt has been the fastest growing debt in the country after home mortgages.
“People have accumulated student loan debt at a faster pace than car loans, payday loans, credit loans,” he said. “Rising tuition costs and relatively stagnant incomes have led to people accumulating debt that now we’re in a recession, it’s harder to pay off.”
Student loan debt is a burden weighing heavily on households and the economy.
The economy is already weak because of the COVID crisis and will likely be the reason why McNab said millions of borrowers may not see total loan forgiveness anytime soon, or another reprieve unless Congress acts.
“We’re going to be entering 2021 in a state of not despair, but an increasing uncertainly unless there is action in the next month and a half by Congress and the president,” said McNab.
If Congress doesn’t do anything and student loan payments restart, McNab recommends having a plan beforehand and set some extra money aside in an emergency fund.
If borrowers can’t repay their student loans yet, McNab suggests talking to the lender about other options, such as asking for a payment deferral or an extended forbearance.
“Figure out what your program is, what your expected payments are, and what relief might be possible,” said McNab. “If you’re unemployed or your income has been significantly reduced, don’t wait for the problem to become so significant that your only choice is to not pay your student loans.”
