More than a third of borrowers say they'll have to cut up to $500 from their budget to handle upcoming payments.
Student-loan borrowers are preparing to resume their payments this month after a three-year-long pause due to the COVID-19 pandemic. And the impending payments aren’t just putting a crimp on clothes, sneakers and nights out — they’re prompting lifestyle resets, stretching work schedules and sapping budget wiggle room, borrowers say.
The pause began in March 2020, in the pandemic’s early, dark days. It’s ending in a moment with its own distinct challenges: hot inflation that’s receding slowly, rising credit-card debt, high interest rates and a cooling labor market with fewer job openings. In July, Nijem started taking weekend shifts at a car valet service. That’s on top of his full-time job with the city of Chicago.
DeRidder started picking up her weeknight shift at the bar and restaurant over the summer. A shift is typically about six hours, ending around 10 p.m. It was easier to handle when school wasn’t in session — but now there’s the school week; plus eight hours of extra work handling special-education paperwork; plus the restaurant shift, which has recently been paying around $60 a night.
In Chicago, Nijem has already clocked some seven-day workweeks since picking up the valet work. The six- to eight-hour valet shifts, paying roughly $20 an hour, have served as a “buffer” that pays for food, gas and incidentals between paychecks. This month, Nijem plans for the money to go toward loan payments, which he expects will be about $300.
Interest-rate attack There was a late-August surge in student-loan payments, researchers recently noted. One theory is that it was a wave of student-loan borrowers paying off principal before interest began accruing in September. Dykes will eventually increase payments above that amount, applying the excess cash to his loans with the highest interest rates.‘Unreal’ rents and a cooling labor market Espinoza Acosta, the recent college graduate in Texas, said it would have been nice to live on his own after graduating.
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