Student Loans Come Due Again: Many Borrowers Will Lose a Lifeline

With her student loan payments on hold for three years, Ashley Dorn, a public school music teacher, found another use for the money she saved during the moratorium. She used the extra cash to pay off $10,000 in credit card debt, a bill that had been nagging at her for a decade.

“I could not have done it if it wasn’t for this student loan debt pause, and I’m worried that I’m just going to have to start racking it all up again,” she said of the credit card debt. She can’t imagine being able to afford payments unless she finds another job, she said, on top of her “already very time-consuming, already very stressful career.”

She earns around $50,000 a year and her husband earns about $45,000 as a government employee, but they still live paycheck to paycheck. Since graduating in 2014 with a master’s in education from State University of New York Empire State College, Ms. Dorn and her husband, Jonathan, who live near Albany, had been making monthly payments on their more than $160,000 in student debt. They paused in March 2020, when, as part of a pandemic relief effort, the Trump administration said borrowers with federal student loans could stop making monthly payments.

The couple’s payments were nearly $900 a month, with Ms. Dorn on an income-driven repayment plan, which adjusts payments to a borrower’s salary.

Now that the pause is ending in late August, and with President Biden’s debt forgiveness proposal shot down by the Supreme Court, the Dorns and millions of others are facing the reality of resuming those loan payments.

For many of the 43.6 million borrowers with federal student debt, the three-year pause created a financial cushion that allowed them to use the money for other purposes: buying homes, paying off credit card debt, supporting family members, undergoing overdue medical procedures and booking vacations. Now they are figuring out how to cut back to fit those payments into their budgets.

The Dorns had always assumed they would have children someday, but the burden of their student loan debt has made them reconsider. For now, their two dogs, Micah and Oscar, and two cats, Ellie and William, will have to suffice.

“That conversation is, like, off the table indefinitely,” Ms. Dorn, 33, said. In addition to monthly expenses like their mortgage and car payments, Mr. Dorn has Crohn’s disease, which adds an extra layer of financial stress.

The couple said they expected their new monthly payments, which will be calculated by their income-driven repayment plans, to be around $800. That may change with the Department of Education’s new I.D.R. option, the Saving on a Valuable Education plan, or SAVE, which factors in income and family size.

Before the payment pause, Ms. Dorn had been relying on her credit card to cover expenses like an unexpected emergency-room visit, veterinary bills, health care co-payments and new car tires. She used credit to replace their water heater, cover a few car insurance payments, and install a new transmission in her husband’s car. Within the last six months, she paid off her credit balance and closed the card using a debt-solution program.

For Shantel Anderson, 27, the pause was a lifeline that allowed her to support her mother and help her avoid eviction. The two struggled when Ms. Anderson was growing up in Philadelphia, bouncing from apartment to apartment until they were evicted; they ended up at a homeless shelter for a week just before she started college. Her mother had lost her job earlier that year, and Ms. Anderson, then 18, had deferred her first fall semester of college because she couldn’t afford to go. Having lost most of her possessions during the eviction, Ms. Anderson relied on donations from people in her life, including her school guidance counselor, for dorm supplies.

Ms. Anderson secured financial aid and student loans to study political science at Eastern University while maintaining a work-study job and other employment, but still graduated in 2018 with $43,000 in debt. The moratorium, which freed up $455 a month, allowed her to cover her mother’s phone bill and some car repairs. Ms. Anderson also helped her mother with groceries, medication, gas and cat food. With these costs handled, her mother could put all of her income toward paying rent and utilities.

Ms. Anderson’s first full-time job out of school, at a veterinary hospital, paid $32,000 annually, and the hospital provided housing at the time. When the pandemic recession hit, her hours were cut. She made one last full student loan payment in March 2020, then a few more $50 monthly payments. But when she found out she would be losing her housing, she stopped making the debt payments to afford rent and other bills.

The pause allowed her to move into a three-bedroom high-rise apartment with a pool and a gym — amenities she thought she’d never be able to afford — paying $500 for her share of monthly rent with three roommates. She bought a car, which made running errands easier, and was able to cover about $400 in co-payments for unexpected health issues and medical procedures.

Some borrowers were shocked last August when Mr. Biden’s debt relief plan was announced.

“That day was crazy to me,” Ms. Anderson said. She believed the plan would have cut her federal student debt in half. Her relief soon gave way to skepticism after Republican lawmakers filed a series of lawsuits to block the plan.

When payments resume, Ms. Anderson expects that her monthly bill will remain around $455, which she will add to her $250 monthly car and credit-card payments. She has increased her income to more than $60,000 a year working as a data manager at a nonprofit, and signed up for Public Service Loan Forgiveness (P.S.L.F.) last October — but she has already started cutting back on certain expenses.

She stopped going to therapy to save on out-of-pocket co-payments and talked to her mother about not being able to help her out as much. In an emergency, Ms. Anderson said, she would sell her car.

She still helps with some of her mother’s expenses: the phone bill, gas money to commute to her part-time job at a nursing home and, occasionally, groceries. But her mother has already fallen behind on rent, and her landlord filed eviction paperwork.

“She had a court date,” Ms. Anderson said. “Her landlord didn’t show up, so the judge threw out her case. I was like, thank the lord, we have more time.”

Lifestyle gains

For others, the pause helped redirect money to items like home renovations and vacations. Elizabeth Burton and her husband, Kyle, carry private and federal student loan debt of about $175,000. The moratorium saved the couple, who live in Manchester, N.H., around $650 each month. Her schedule as a sonographer allowed her to stay home during the day, saving them an additional $1,200 in child-care costs during the pandemic, keeping their 8-year-old and 5-year-old at home.

While Ms. Burton, 39, and her husband, 38, a sales representative, still had to pay $500 each month toward private loans, the extra funds allowed them to put a second bathroom in their house, pay off credit card debt and book an eight-day family vacation to Disney World.

Now that Ms. Burton and her husband have higher paying jobs, they believe an income-driven repayment plan would lead to a higher bill than before.

“There’s no money for my kids for college,” Ms. Burton said. “I’m still going to be paying down my loans. But you know, my son’s 8. I have 10 years left in my federal loans. There’s no money for him. He’ll either have to take out loans, he’ll have to live at home, he’ll have to get a scholarship — I’ve got nothing left for him.”

The Dorns used some of their saved student debt money to book a vacation, too — for July 2025. They plan to celebrate their anniversary in Jamaica, hoping to soak up the tropical atmosphere and explore the marine wildlife. The couple is on a payment plan for the trip, which offers the option to spread small payments over three years. It’s their dream vacation, Ms. Dorn said. But with the payment pause ending, they are considering giving that up, too.