One of the biggest concerns I have with an upcoming/likely recession is that student loan payments are being turned back on in October with interest rates starting in September. Terrible and truly awful. Millions of young people are now being forced to pay the minimum payment, a financial burden they have not had in the last two years. Many took the money that would been payments towards their student loan debt to spend on living costs and a little fun. Additionally, many had clung to the hope that at least 10K or more would be erased from their debt, likely reducing their desire to save and plan for repayment. The worst fate is not the debt itself, but the interest rate. Paying off the minimum payment with a 5-6% interest rate will put hundreds of thousands of people, young and old, in crippling and high-anxiety financial situations. Ask any college or student who has recently graduated and they will tell you, “I am fine paying off my debt, but cut or reduce the interest rate at least”. It is like watching film directors (the president) choose Liam Hemsworth (student loan forgiveness) to replace Henrey Cavill (lower interest rates) in The Witcher. At the same time, all of the audience screams a resounding, “No!”
According to a study conducted by
Bankrate in March of 2023, 21.7 percent of millennials and 15.4 percent of Gen-Z live paycheck to paycheck with little savings. Think about that, that’s just the number they are reporting. The average student loan debt is $28,400 according to
Nerdwallet. Now, for all those thinking that’s not bad, anyone who graduates with a college degree can pay that off quickly. MMMMhmm, not so fast boomer, gen-x, or anyone with a house. The focus should be on the interest rate. Remember, thousands of people who are Gen-Z and millennials are already living paycheck to paycheck.
Many in my generation can barely even make ends meet, how in the hell are they supposed to pay off their student loans with interest rates greater than 4%. How can they save for a downpayment on a house, afford kids, or even afford a car? Inflation has been made worse by increasing the cost of rent, groceries, transportation, houses, and a car. Many are not living the American Dream, many are living in purgatory of working their ass off just to pay rent. Others are simply in the American Nightmare of impossible costs of living and stagnated incomes. My generation is stuck in a loop of pushing the rock up the hill, just to have it rolled back down due to the sheer weight of debt.