Anna Flores and Higinio Garcia
Photo: Gabriela Alvarez
Do you remember the student loan?
It has now been almost a year since the US Department of Education allowed tens of millions of federal lenders for student loans to press the pause button on their accounts because of the financial damage caused by the coronavirus pandemic.
About 90% of eligible borrowers accepted the offer, according to data analyzed by Mark Kantrowitz, an expert in higher education.
As a result, life without the monthly bills became the new normal.
Anna Flores, a counselor at a primary school charter in Lakeview Terrace, California, has not even reported to her money laundering account since March 2020. That left her with an extra $ 350 a month. She owes almost $ 100,000.
Between going out less and not having to pay off her student loans, she was able to save more than $ 12,000. Before the pandemic, she had nothing in the bank. “Not a single dollar,” Flores, 34, said.
She had been engaged since December 2019, but without any money savings, the cost of a wedding felt daunting.
After she and her fiancé built up their savings, they began planning a ceremony.
Finally, in November, she marries her husband, Higinio Jr., in a small chapel with a garden. About 20 people attended. They had more than enough to cover the cost of $ 8,000 for the wedding.
“The break worked so much in our favor,” Flores said. “It allowed us to really dream.”
The couple continued to save aggressively, and they still have more than $ 4,000 in the bank. They also started investing and paying off much of their credit card debt.
Feeling financially secure also led them to take a risk and start a baking business together. They have since become known in their San Fernando Valley community for their ‘chocoflan’, a combination of chocolate cake and meat.
“We never thought we would become entrepreneurs,” Flores said.
Anna Flores and Higinio Garcia could partly be a baking industry, mr. H Chocoflan, starts due to the payment break.
Source: Anna Flores
There are more than 44 million student loan borrowers in the US, and the country’s outstanding balance is expected to exceed $ 2 billion by 2022. The average student loan balance is about $ 30,000, compared to $ 10,000 in the early 1990s, while many lenders owe $ 100,000 or more. According to Kantrowitz, the average bill is $ 400 a month, and research has found that the payments make it harder for people to save for their future, public businesses and start families.
Over the past twelve months, lenders have given a taste of another life.
Ethan Barnhardt, a local government administrator in Columbus, Ohio, has about $ 60,000 in student loans. His wife, Elizabeth, a pediatrician, owes more than $ 400,000. Their combined monthly payments were more than $ 700.
Barnhardt left a year free of payments much stronger.
The couple was able to save for their retirement more than ever before; their emergency savings are meanwhile the largest it has ever been.
“It gives you a good sense of stability,” Barnhardt, 33, said.
Ethan and Elizabeth Barnhardt
Thanks: Barnhardt family
When unexpected expenses arise, they pull out their credit cards. Not anymore. When Elizabeth’s car recently needed new break blocks and tires, they paid the bill in cash.
And for the first time, he and his wife are seriously considering starting a family.
“We both want the experience of raising children,” Barnhardt said.
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On his first day in office, President Joe Biden extended the pay break and the waiver of interest for federal student loan borrowers until September 30, meaning many borrowers can last longer than 18 months without paying their debts.
For Leticia Ortiz, which owes about $ 8,000 in student loans, the break is necessary. Before the pandemic, Ortiz, 60, lost her job as executive assistant.
Finding new jobs only became more difficult during the public health crisis. She was afraid she would fall behind on her bills, including her mortgage. She owns a one bedroom unit in Colton, California.
But because she did not have to pay $ 160 a month for her student loans, it gave her more breathing space. She was able to send some of the extra money to her mortgage lender. She could also avoid dipping into her small retirement savings.
To stay positive during these difficult times, she focuses on the months she has left without paying student loans, rather than worrying about what will happen when the bills start up again in the fall.
“Right now, it’s just hopeful,” Ortiz said. “It gives me the best part of this year to close a post.”