TISLA in the News

The job market is cooling but still pretty strong, so you may be able to find extra work. In the meantime, Betsy Mayotte, president of the Institute of Student Loan Advisors, a nonprofit based in Plymouth, Massachusetts, said individuals should reevaluate their expenditures and stop spending as though the debt is forgiven. She suggests borrowers set up interest-bearing accounts into which they can deposit amounts equal to their anticipated monthly payments. While the interest on those accounts can be beneficial, what’s more helpful is the practice of budgeting and forming a new routine around those payments, Mayotte said.

Betsy Mayotte, President of the Institute of Student Loan Advisors, encourages people not to make any payments until the pause has ended. Instead, she says, put what you would have paid into a savings account.

“Then you’ve maintained the habit of making the payment, but (you’re) earning a little bit of interest as well,” she said. “There’s no reason to send that money to the student loans until the last minute of the 0% interest rate.”

Mayotte recommends borrowers use the loan-simulator tool at StudentAid.gov or the one on TISLA’s website to find a payment plan that best fits their needs. The calculators tell you what your monthly payment would be under each available plan, as well as your long-term costs.

“I really want to emphasize the long-term,” Mayotte said.

With prices rising for housing, gas, groceries, vehicles and more, inflation has staked its claim on the wiggle room in borrowers’ budgets that paused payments initially provided. Illustrating this point, a recent study from the Philadelphia Federal Reserve Bank found that nearly 1 in 3 borrowers who were making full payments before the pandemic said they won’t be able to make payments in full when the pause ends.

“For a lot of people,” Mayotte says, “that money just isn’t there anymore.”

Betsy Mayotte, President of the Institute of Student Loan Advisors, encourages people not to make any payments until the pause has ended. Instead, she says, put what you would have paid into a savings account.

“Then you’ve maintained the habit of making the payment, but (you’re) earning a little bit of interest as well,” she said. “There’s no reason to send that money to the student loans until the last minute of the 0 percent interest rate.”

Mayotte recommends borrowers use the loan-simulator tool at StudentAid.gov or the one on TISLA’s website to find a payment plan that best fits their needs. The calculators tell you what your monthly payment would be under each available plan, as well as your long-term costs.

“I really want to emphasize the long-term,” Mayotte said.

To calculate how much your monthly bill would be under different plans, use one of the calculators at Studentaid.gov or Freestudentloanadvice.org, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

If you do decide to change your repayment plan, Mayotte recommends submitting that application with your servicer before payments turn back on.

“I have significant concerns that there will be some big servicing delays,” she said.

Borrowers should be on the lookout for updates from the Education Department or their loan servicers, said Betsy Mayotte, founder of the Institute of Student Loan Advisors, a nonprofit group. She suggested that borrowers check what their monthly payments will be once payments resume. (To do so, look on www.studentaid.gov). If the amount is too high, they can use the department’s online calculator to see if a different payment plan may be available.

Borrowers should also make sure their servicer has their correct contact information, she said. Open all correspondence promptly. “With all the moving parts and changes in the works with student loans right now,” she said, “it’s even more important for borrowers to ensure they are up to date on what their responsibilities are.”

It’s a weight felt by over 43 million Americans. It’s pitched as a necessity for building a better life. There was a chance that some of it was going to be forgiven.

According to the Education Data Initiative, the average student loan debt balance is upwards of $40,000. And the cost of college keeps rising. Over the past 20 years, college tuition at in-state public universities has risen 175 percent. The numbers can be dizzying, especially for recent high school grads.

Currently, the Supreme Court is deciding the fate of President Joe Biden’s student relief plan. At the same time, the pandemic-era pause on student loan payments is set to end. For over three years now, borrowers haven’t had to pay a dime, but it all may be about to change.

We wrap up our Life and Debt series in partnership with Bloomberg to look at student debt and what comes next.