According to a new TransUnion survey, when student loan payments resume in October, half of borrowers will have to start paying installments of at least $200.
According to the agency, one in every five people is considering a monthly payment of $500 or more.
According to TransUnion’s data, slightly more than 40 million Americans have student debt totaling $1.6 trillion. Two-thirds of these borrowers, or almost 27 million, will be making payments for the first time since they were suspended at the start of the epidemic in March 2020 – or for the first time ever if their loans were not previously under repayment.
Borrowers “should begin assessing their monthly budgets, making any needed adjustments as soon as possible to help mitigate the impact of these payments,” Margaret Poe, TransUnion’s head of consumer credit education, said in a statement.
This is especially true given how many people have taken on new debt in the last three years: According to TransUnion, 36% of student loan borrowers took out vehicle loans, 15% took out mortgages, and 15% took out unsecured personal loans.
“These additional credit products mean additional monthly payments, the accumulation of which may pose added challenges for households attempting to reintegrate student loan payments into their monthly budget,” Liz Page, head of TransUnion’s consumer lending business, said in a statement.
The average borrower currently has about $35,000 in student loans, TransUnion reported.
The business stated that its data, dated May 2023, did not include the Department of Education’s July 14 statement that changes to income-driven repayment programs will result in the automatic forgiveness of 804,000 borrowers’ loans.
The Biden administration announced a yearlong “on-ramp” transition period during which borrowers who miss monthly payments will not be considered delinquent, placed in default, reported to credit agencies like TransUnion, or referred to debt collection agencies.
Interest will accrue during the period, though, which will run from Oct. 1, 2023, to Sept. 30, 2024.