‘There’s no way I can pay it’: Americans dread restart of student loan payments

Many Americans are dreading the return of interest accrual and the restarting of their monthly student loan payments as a huge political fight over Joe Biden’s debt forgiveness plan rages on.

Americans have $1.635tn in federal student loan debt, held by 43.8 million borrowers. Some 26 million people applied or were automatically accepted for student debt relief under Biden’s plan before applications were suspended because of lawsuits launched by Republicans.

That plan would provide student debt relief of up to $20,000 for eligible borrowers and up to $10,000 for borrowers with less than $125,000 in annual individual income.

But Republicans pushed to prevent any further extensions of student loan payments and want to overturn Biden’s plan that has now been tied up in the US courts since last year, with a US supreme court ruling on the issue expected very soon.

Michael Chaney, a 56-year-old truck driver in Ohio, has student debt from a retraining program through the Ohio Bureau of Vocational Rehabilitation that he went into after getting injured on the job while working in a foundry in the late 1990s.

“I had to take out student loans to help pay for the schooling, or else they wouldn’t help me,” said Chaney.

He said his student debt increased due to having to repeat some math classes. Even after Chaney filed for bankruptcy in 2009 after getting divorced, his student debt wasn’t able to be discharged. He worked in IT after finishing schooling but switched to truck driving to be able to work more hours.

“There’s no way I can pay it. They’ve got it set up so you can never pay it off,” said Chaney, who still owes around $60,000 in student loans. “I keep making $400 or $500 a month payments and none of the principal goes down. I worked all my life and I don’t have nothing. I’ve worked six days a week, 12-hour days in the steel mill before I got hurt. We’re barely staying alive. I can’t keep up. I can’t pay it.”

The debt ceiling package negotiated between Biden and the House speaker, Kevin McCarthy, and signed into law in June 2023 ends the pause on federal student loan payments and interest.

A spokesperson for the US Department of Education told the Guardian the department will be in contact with borrowers before repayments begin. Interest accrual on student debt is set to begin occurring again in September 2023 and the first payments are due in early October.

For millions of Americans, restarting payments or even being able to keep up with payments, won’t be financially possible.

“Adding another expense to my budget would put me beyond a financial hardship,” said Anne Marie Mosley, a teacher in Massachusetts who is still waiting to see if her public loan service forgiveness application is approved.

“When payments restart, I will not pay. I’m an underpaid teacher and I just won’t have the funds,” said Jacque Abron of Texas.

Janelle Gallardo, a mother of three in California, started paying her student loans in 2016 when she completed her master’s degree, with payments ranging from $200 to $500 a month. Under the student loan payment pause, she has struggled to keep up with the rising cost of living and currently works two jobs to make ends meet.

“I went from paying about $1,000 a month to now over $2,000 in groceries, I cannot even imagine paying another large bill like this,” said Gallardo. “I don’t even know how we would make it work with resuming payments based on how much everything has gone up in my state. I have not been paying during the pause because all our money either goes to bills or taxes, we haven’t even been able to afford health insurance right now.”

But Republicans have also pushed to add retroactive interest to student loans that did not accrue during the pause and revoke forgiven debt for over 250,000 borrowers who applied and were approved for public service loan forgiveness.

Christina Winton of Phoenix, Arizona, has struggled with paying her student loans since graduating with her bachelor’s degree and completing her master’s degree program.

She has filed for public service loan forgiveness, after having to obtain years of her bank statements because her loan service provider did not have records to prove she made the required 10 years of payments to be eligible.

She explained student debt has affected her considerably over the years and despite keeping up with payments, through loan service providers changing rules and ballooning interest, she still owes more than she originally borrowed.

“I’ve been paying student loans for over 30 years. I’m a first generation graduate, first in my family and maybe the last one. I have a 17-year-old and an 11-year-old. Neither of them will be able to attend school, I can’t afford to pay for it, I’m too busy trying to work, pay the bills, and pay these loans,” said Winton.

She added: “Once loans restart with interest starting again, the artificially high balance bill will have interest added again, causing a huge crisis.”

Debt relief advocates have pushed for broader student loan forgiveness and to expand borrower rights, such as making it easier to discharge student debt through bankruptcies. The NAACP has pushed for a minimum of $50,000 in student loan forgiveness and has warned about the negative impacts starting student loan repayments will have without any forgiveness plan enacted.

A recent report by the Jain Family Institute found the student debt pause benefitted borrowers who were already going to pay their student loans back, while structural problems with student debt have created a system where the majority of borrowers have not and cannot pay back their student debt.

Jim Mazey, 54, who lives in Ohio, said he had paid over $27,000 on an original student debt of $44,00, but over $18,000 of that went toward interest and he currently had 140 more monthly payments left. He obtained a bachelor’s degree and certification to work as a purchasing manager, where he has worked for 29 years.

When the pause ends, he fears being stuck with payments into retirement or the debt delaying his ability to retire.

“I will be 65 years of age before the loan is paid,” said Mazey. “Like most people we have, and always will be, living paycheck to paycheck.”

Even before the pause on federal student loan payments, the majority of borrowers were not making any payments, with just over 50% of borrowers not making any payments toward direct and FFEL loans in late 2019, according to Department of Education data. More than 4 million borrowers were paying zero payments while enrolled in income driven repayment plans.

Audrey Fiscus of Arizona has struggled with student debt since graduating nursing school in 2006 as a single mother, who divorced her ex-husband at the time and went back to school while he struggled with a drug addiction.

“I’ve been paying my student loans monthly for over 10 years, ranging from $450 to $510 a month,” she said.

Despite making regular payments for ten years, her $35,000 in student debt has ballooned to $82,000 since 2006.

“I feel like I’ll die with this debt,” she added.