A recent survey found that up to 40% of student loan borrowers said their loans have negatively impacted their ability to meet basic needs like food, housing and transportation, a financial burden that becomes even more pronounced during the holidays.
At first glance, someone like Ben L shouldn’t be in financial trouble. He earned undergraduate and graduate degrees from Georgetown University and Columbia University, respectively, and now works for a biotech company, earning a six-figure salary. Still, the 36-year-old is mired in student debt.
“I never used all my vacation time because I couldn’t go anywhere,” he said.
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He has $95,000 left in Sallie Mae loans (private loans, not federal loans) to pay off the master’s program he completed in 2018, as well as credit card debt accumulated from living in New York City for the past 15 years. During the holidays, Ben L is reminded of the debt that keeps him from participating in the joy and generosity of the season.
“It would be nice to participate in some sort of nominal gift-giving event, but it’s impossible. None of my friends want me to do that,” he said. “In fact, a lot of them are actively helping me stay afloat financially.”
Ben said his monthly student loan payments are about $1,850. Add that money to the rent on his one-bedroom apartment in Hell’s Kitchen and other expenses, including complicated medical bills, and there’s little room for anything else. “My life is not that idle — I live well, I eat enough, and I’m fine — but there’s really nothing extra,” he said. “I basically live paycheck to paycheck.”
Ben L’s story is far from unique. A recent survey conducted by The Institute for College Access and Success (TICAS) and Data for Progress found that more than one-third of respondents said their loans had a negative impact on their ability to pay for medical expenses for themselves or their dependents; 52% of borrowers said their loans had a negative impact on their ability to save for retirement, and 45% said their debt had a negative impact on their housing plans.
“What’s most concerning to me is how many borrowers report making trade-offs between meeting basic needs and paying their student loans,” said Michele Zampini, TICAS vice president for federal policy and advocacy.
The biggest concern for me is… the trade-off between meeting basic needs and paying student loans
“What this tells us is that whatever safeguards were theoretically retained in the repayment system, they were not functioning properly to protect borrowers from [having to make] These trade-offs. “
Those safeguards have become even scarcer with the Trump administration’s recent announcement to eliminate the Biden-era student loan repayment program. The Saving on a Valuable Education (Save) program is an income-driven repayment plan launching in 2023 with the goal of cutting undergraduate loans in half, reducing monthly payments to $0 for some borrowers and providing early relief to low-balance borrowers.
The Trump administration argued that the rescue plan was illegal and overstepped federal authority. The Department of Education said in a press release that it will halt all new Save enrollments, deny any pending applications, and move existing borrowers to alternative repayment plans.
Zampini expressed deep concern about the government’s decision.
“All of these borrowers are going to have higher monthly payments than they otherwise would have been,” she said. “The bottom line is there’s no real safety net for borrowers to quickly access other affordable plans because they haven’t been established yet. [them] go out. “
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One of the borrowers is Erin O, 31, who works in the nonprofit sector. She is currently enrolled in the Save plan and expects her monthly payments to double, if not triple, when the plan ends. She also participated in the Public Service Loan Forgiveness program, which faces an uncertain future as the Trump administration plans to restrict eligible organizations on ideological grounds.
“No one makes it easy for you to understand what you need to know,” she said.
Erin’s loan has been in deferment while litigation over the Save program continues, but she will soon have to begin repaying the remaining $34,680 in federal loans she took out for her master’s program in international communications. She will travel from Denver to Texas to spend the holidays with her family. They decided in advance that it would be a light Christmas.
“Over the past few years, especially during COVID, I’ve definitely downgraded holiday spending to just immediate family and very close — like, decades-long — friendships,” she said.
This year, her wallet has become even tighter, she said: “Everyone in my immediate family agrees that this isn’t really a gift-giving year.”