PHILADELPHIA (KYW Newsradio) — Federal student loan payments have been on pause since the beginning of the pandemic. But now, the debt is due.
Loans will start accruing interest on Sept. 1 and minimum payments will resume in October.
While millions of borrowers aren’t thrilled to resume payments, it’s in the government’s best interest, said Dr. Samuel Rosen, assistant professor of finance at Temple University’s Fox School of Business.
“The general idea of forgiveness in the first place was ultimately a policy about transferring resources from one group to another,” he said. “So now that they’re starting to resume payments — and presumably many people with the means will begin paying their loans again — this money goes to pay back the debt they originally gave to borrowers.”
But how will this affect other sectors of the economy, like tourism and entertainment?
“If you have to start resuming payments, and you’re able to, then that money has gotta come from somewhere in your own personal budget,” Rosen advised.
Rosen discusses the current state of student loan debt, the Biden administration’s new plan for loan forgiveness and options for those having trouble making payments again.
Listen to the full conversation in the player below, on the Audacy app or wherever you get your podcasts.