'Terrifying': Resumption of Student Loan Repayments May Force College Grads To Dip Into 'Fun Budget,' Media Warn

(RichLegg via Grabien)
October 4, 2023

For the first time since President Joe Biden took office, student loan debtors will this month have to pay back some of the money they borrowed from the federal government.

Biden has tried to soften the blow. Since the Supreme Court in June shot down the president's sweeping plan to write off student loan debt, he has nonetheless managed to "forgive" $127 billion of the taxpayer-fronted money for a few million former college students, including $9 billion on Wednesday, per the White House.

Still, the mainstream media have been filled with alarm about hardships and injustices that could result from the resumption of student loan debt collection. Lawyers, former philosophy professors, aerospace defense workers, and university administrators could be among those hardest hit, according to reports. Cutbacks could be required to vacations, restaurant dining, spa days, and other "fun budget" items.

NBC News, Oct. 1: "The 'terrifying' trade-offs millions of Americans face as student loan repayments resume":

Rhiannon Dodds Funke said she and her husband have nearly $1 million in student loan debt. Dodds Funke is a law school graduate and her husband, a former philosophy professor and cancer survivor, recently went back to school to get a law degree to help support their two teenage children. …

"Now to have the student loans stacked on top of it, it's really, really scary. We are going to be living on the brink," she said. "There have been a lot of expenses that we've been trying to tear down to try to prepare for this."

Among those changes, the family recently got rid of cable television and canceled phone lines, and Dodds Funke is going to give up the office space where she practices law and work from home.

Associated Press, Sept. 30: "Borrowers are reassessing their budgets as student loan payments resume after pandemic pause":

Millions of Americans must start repaying their federal student loans again in October, with monthly payments averaging hundreds of dollars. To get ready, borrowers are cutting expenses, taking on additional work, and looking for options to reduce their monthly payments.

Megan McClelland, 38, said she has started asking for October shifts with a catering company and a winery to help supplement her income.

New York Times, Sept. 15: "Will Restart of Student Loan Payments Be the Last Straw for Consumers?"

Americans have continued spending despite dwindling savings and inflation. But retailers worry resuming loan payments could push some over the edge.

Mykail James [who works in aerospace defense] has a plan for when payments on her roughly $75,000 in student loans restart next month. She’ll cut back on her "fun budget"—money reserved for travel and concerts—and she expects to limit her holiday spending. …

In addition to cutting back on travel and concerts, she plans to work more on her side jobs to earn extra cash. In the past, she's driven for UberEats and Instacart. (She said she would also continue expanding her financial education business.)

New York Times, June 21: "Student Loan Pause Is Ending, With Consequences for Economy":

Jessica Musselwhite took on about $65,000 in loans to finance a master's degree in arts administration and nonprofit management, which she finished in 2006. When she found a job related to her field, it paid $26,500 annually. Her $650 monthly student loan installments consumed half her take-home pay.

She enrolled in an income-driven repayment program that made the payments more manageable. But with interest mounting, she struggled to make progress on the principal. By the time the pandemic started, even with a stable job at the University of Chicago, she owed more than she did when she graduated, along with credit card debt that she accumulated to buy groceries and other basics.

Not having those payments allowed a new set of choices. It helped Ms. Musselwhite and her partner buy a little house on the South Side, and they got to work making improvements like better air conditioning. But that led to its own expenses—and even more debt.

ABC News, June 8: "'A train wreck coming': Americans brace for the return of student loan payments":

Without having to pay for student loans over the last three years, many Americans have created strict budgets that do not include a monthly student loan payment, according to Shafroth. With a new monthly student loan bill averaging $160, something in these budgets has to give.

"Leisurely spending is probably gone," Robert Bistoury, a 2020 graduate of Baruch College who said he has $27,000 in student debt, told ABC News.

That former students of color will be forced to pay back their loans, just like everyone else, is "white supremacy at work," the media have suggested.

CNBC, Oct. 2: "Latino student loan borrowers face extra challenges as payments restart":

In October, when the Biden administration turns the $1.7 trillion federal student loan system—dormant for more than three years—back on, millions of people are expected to struggle financially. But the problems may be especially severe and long-lasting among Latino borrowers, who tend to earn less than non-Hispanic whites and fall behind on their loans at a higher rate, consumer advocates say.

New York Times, Aug. 29: "Biden Looks for New Ways to Energize Black Voters":

When the Supreme Court ruled in June that Mr. Biden's [student loan debt cancellation] plan was unconstitutional, Ms. Corbett, like many Black Americans, felt a familiar sting of disappointment. The fact that the decision came just 24 hours after the court struck down affirmative action in college admissions, a longstanding mechanism for economic and social mobility for Black people, was almost disorienting.

"It's like you get to the steps of equity and the steps are torn down," she said.

Associated Press, June 14: "In student loan and affirmative action rulings, advocates fear losses for racial equality":

Now, the student loan cancellation plan has been dismantled by the U.S. Supreme Court, which on Thursday struck down affirmative action in college admissions. Both policies disproportionately help Black students. To [community organizer Makia] Green and many other people of color, the efforts to roll them back reflect a larger backlash to racial progress in higher education. …

Green said she sees both court cases as connected to conservative attacks on diversity, equity and inclusion programs. Critics say opposition to such programs is rooted in questions of fairness and in white grievances over the advancement of nonwhite people.

"This is white supremacy at work," Green said.

Washington Post, March 4: "Student loan case could be another blow to Biden's racial equity push":

Solicitor General Elizabeth B. Prelogar did not mention race in Tuesday's appearance at the Supreme Court, but her impassioned defense of President Biden's student loan relief program had a second, unmistakable purpose: It marked a last-ditch bid to protect one of the last remaining pillars of President Biden's effort to shrink the racial wealth gap.

OK, but: The good news is that the vast majority of Americans who do not have student loan debt will no longer be required to cover the unpaid college expenses of a relatively wealthy minority.

If that reality has been underreported, it may have something to do with who makes the news. Journalists are overwhelmingly college educated and, at least among graduates of the top programs, disproportionately unable to pay back their student loans.