COLORADO SPRINGS — Student loan debt is something many Americans face, but the Department of Education last week extended the pause on federal student loan payments once again. Payments will resume in October 2021.
News5 spoke to an expert at University of Colorado Colorado Springs about why the decision was made by the federal government and what college graduates can keep in mind to stay on track.
According to Tatiana Bailey, the director of UCCS Economic Forum, there is nearly 1.7 trillion in student loan debt in America, but the issue overall is nothing new.
"Even during good economic times, prior to COVID-19, one in seven borrowers were 90 days delinquent on their loans," said Bailey. "About 2/3 of them are treading water, in other words, they were barely making interest payments and not bringing down the principal amount on that debt."
Bailey said the problem of student loan debt grew during the pandemic, which is why President Joe Biden directed the Department of Education to pause student loan payments.
"The government knows that especially young people can get hit harder because they're not earning as much," said Bailey. "Put all that together, it's probably a good move from a financial stability standpoint, not only for the individuals in households that have student loans but also for the federal government."
Carina Mezayek graduated in August of last year, in the midst of the pandemic. She's one of the many whose job has been impacted and loans deferred with 0% interest rate.
"I had got moved to part time with my job. There was just a lot of insecurity and that's why not paying has helped," said Mezayek. "It's also helped with my lifestyle so I can focus on utilities and
rentals, considering my job has been affected."
What should borrowers like her do now? Bailey recommends to take advantage of a 0% interest by not wasting money, prioritize your bills, and keep paying off your loans if you can
"We were able to get our full time hours back, so starting next month I'm wanting to pick back up on those payments, that way I don't get too left behind," said Mezayek. "I just hope in the future, there aren't any major changes that make it harder to pay everything back."
Bailey also said if you're considering refinancing your student loan, ask a lot of questions and pay close attention to the interest rate. You could end up paying more in the long run.
If you're considering higher education, it's also recommended you learn as much about the field as you can, like how many job openings there are and what the entry-level salary is.