Deferring savings, canceling subscriptions, eating out less: How five borrowers are preparing for their student loan payments to restart

Student loan payments resume this month, and millions of borrowers across the region are rearranging their budgets to make space for a monthly expense they haven’t had to think about in more than three years.

Some who graduated during the pandemic will be making their first student loan payment.

The restart comes after more than millions of Americans thought they would be seeing $10,000 or $20,000 of their debt wiped out under President Joe Biden’s plan, only to see the plan get struck down by the U.S. Supreme Court.

The rollout has been far from smooth, with reports of long wait times for borrowers calling their loan providers and confusion about new plans, such as the income-driven SAVE program.

“The stakes are pretty high on this, and we’re talking a big amount of money, billions and billions of dollars in payments running through the system,” Rohit Chopra, director of the Consumer Financial Protection Bureau, said in an interview last month. “It’s also going to have an effect on whether people are going to be able to spend in the economy.”

We spoke to a dozen Philadelphia-area residents about what the resumption of these payments will mean for them. Most borrowers said they plan to cut back on fun activities, such as eating out and going to concerts, and have already canceled streaming subscriptions and gym memberships. Many expressed regret, saying they wished they had chosen a less expensive option, such as community college.

Here are stories from five of them.

‘Deferring things like savings and retirement’

Lindsay Wood has been paying off about $20,000 in undergraduate loans since 2007, and $60,000 in graduate school loans since 2014. Because of interest, she now has $120,000 in student debt, despite having made monthly payments before the pandemic pause.

In her early days of paying off the undergraduate loans, she was a public schoolteacher raising three children, so she qualified for an income-driven repayment plan that reduced her monthly payments to almost $0. At the time, she was just thinking about being able to provide for her family. She wasn’t thinking, she said, about the interest that was continuing to accrue, driving up her debt.

Once she moved to a corporate job, conducting technology training in the legal sector, she could afford larger payments, about $400 to $500 a month. But still, she said, “there was no way to even think about my future with this massive student loan debt staring at me.”

In 2019, she took a job at Penn State Abington. She moved her family from Florida to Pennsylvania, motivated by the knowledge that five more years of work in the public sector — combined with her earlier years teaching — were all she needed to qualify for public service loan forgiveness.

“I understand that I’m way luckier than most people because I have an end date for my student loans,” said Wood, who is on track for forgiveness in February 2025.

“In the private sector obviously I made more money than when I was teaching, but in some ways having the student loan benefit … it’s not reflected in my salary, but not having this huge worry about my student loans long term” has more value, she said.

In the meantime, she said, she’ll be making payments of less than $150 on the SAVE plan, and making sacrifices.

“Deferring things like savings and retirement,” she said. “I bought a Ninja coffee maker so I can … not spend my student loan payment on coffee.”

Looking back, she said, she wishes she had considered more affordable options, such as attending community college, as her own son is doing now.

As a first-generation American whose parents emigrated from Cuba and the first in her family to go to college, “sometimes you idealize the promise of what a college degree can get you,” she said, “and you don’t realize you’ll be 20+ years down the road paying off your degree.”

‘Don’t do what I did’

Kenneth Blair Jr. is increasingly anxious as his payment due date approaches.

“My payments are the equivalent of a mortgage,” Blair said. (He and his wife also have a mortgage payment, monthly car and insurance payments, and two children to support.) “I don’t think the numbers the loan servicers are coming up with are realistic.”

He’s trying to get approved for an income-driven repayment plan, which he hopes will lower his payments to less than $500 a month, but said he has been unable to reach his loan servicer over the phone — “you literally have to be on hold for most of your workday.”

He has submitted income documents through his online portal, crossing his fingers that he’ll be approved before his first payment is due later this month.

“At the current rate, I’m going to be very honest with you, I don’t know how I can make that payment,” Blair said. “I have no idea where I’m getting a four-digit student loan payment.”

Though his wife has less student loan debt, she will also see her payments resume at the end of the month. She is waiting, too, for word on whether she can qualify for lower payments.

“We’re living from check to check. … We are looking at maybe $300 to $400 left after we pay our bills,” said Blair, who is also a pastor at Greater Harvest Fellowship in Southwest Philadelphia.

He and his wife both work in education and should eventually have their loans forgiven through the public service forgiveness program. The last time Blair checked his progress, however, he still had more than 100 payments left before forgiveness.

As he counsels high school students every day, he encourages them to consider community college.

“I’m trying to plan their futures,” he said, “and at the same looking at my numbers saying, ‘Don’t do what I did.’”

‘I wasn’t really prepared’

Since graduating from Drexel with a psychology degree in December, Sophia Russi has lived at home and taken public transportation into the city for her job.

“Right now, I’m not making enough money to be living on my own and paying those loans back,” she said.

As she works as a behavioral health technician for a company that contracts with schools in the region, Russi is also applying for graduate school programs. While another degree would require her to borrow more, she is hopeful she’ll be able to make payments while in school and earn more money after graduation.

As a psychology graduate, “there is just not a lot of opportunities to get jobs where you can sustain yourself while paying off a huge amount of loans,” she said. “I’ve noticed that’s been an issue for a lot of people in my field. You basically have to go back to school to make more.”

Russi said she has been voluntarily making payments of $200 to $300 since June, but this month the loans her parents took out for her will also need to be repaid. They had agreed that Russi would pay back those, too, so she will have to budget for an additional $500.

“I definitely am very stressed out about it. This has been the first time in my life I’ve really had to think about money,” she said. “I wasn’t really prepared for this moment in terms of the education I was given in school.”

Living with family and not owning a car, she said she feels lucky that her regular monthly expenses consist only of groceries, her SEPTA pass, and a phone bill. She plans to start eating out less and socialize in ways that don’t involve spending money.

In retrospect, she said, “I would have 100% gone to a community college to start out.”

‘I have this debt for no reason’

“Sometimes it is hard for me to believe I have $35,000 in debt because I did all the things they tell you to do not to get in debt,” Debora Charmelus said.

She chose Temple University due to its proximity to her family’s home in the Northeast. She commuted all four years. While in school, she worked two jobs — one as a sales associate at Old Navy and the other as an intern for the Fox School of Business. She received a Pell grant (which would have made her eligible for $20,000 in cancellation under Biden’s plan, had it not been blocked by the Supreme Court) and didn’t take out any cost-of-living loans except for books.

And, until the pause, she made income-driven repayments, which ranged from near $0 when she was unemployed to $200 when she was making $32,000 a year.

Now, the resumption of payments, which are set to be more than $200 a month, weighs on her.

“I don’t really have a plan at this point,” she said. “I’m working to do the SAVE program, but it just feels really frustrating because I don’t see the light at the end of the tunnel.”

“I know $35,000 isn’t as bad as other people,” she said. “What I’m afraid of is I’m going to have these $200 to $300 payments, and I’m going to pay them for however many years, and I’m not going to make a dent.”

As someone who is self-employed, running her own production agency, she is especially worried because her income can vary from month to month.

“I feel like they don’t really have a solution yet for people who are self-employed,” she said. “I know in January and February that is going to feel a little tighter for me.”

Charmelus pays $1,000 a month in rent and is putting off buying a car. She plans to heat her home with an electric heater this winter to avoid the nearly $300 gas bills she’s been getting for her small apartment.

“I strongly considered going back to school to get a master’s degree … but I just don’t want to accrue more debt,” she said. “Now that I’m an entrepreneur, it really does feel like I have this debt for no reason. I don’t want to say college was completely pointless, but the work I do now doesn’t have anything to do with my [communications studies] degree.”

‘I was hoping the Biden plan would pull through’

At the end of last summer, amid the pandemic pause, Muriel Movida took $2,000 of internship earnings and made a single payment toward the debt she accrued getting her master’s degree. Then for about a year, she said, she didn’t look at her account.

“I was hoping the Biden plan would pull through, “ she said, and cancel $10,000 of her debt. But “the realist in me was like ‘this isn’t going to happen.’”

The realist was right, and this fall, Movida has found herself reassessing her monthly budget to make room for the $400 payments she will be making with the SAVE plan, which cut down her payments after accounting for how much discretionary income she has. Every month, Movida pays about $1,000 in rent for the apartment she shares with her boyfriend, as well as about $500 for her car payment and insurance.

To make room for the extra $400, she canceled her $70 monthly ClassPass fitness membership, opting instead to take advantage of a $30 multi-gym membership program offered through her insurance and shopped around for cheaper car insurance, saving $100 a month.

Movida has been trying, too, to be more disciplined about eating at home and packing her lunch, instead of splurging at Reading Terminal Market near her coworking space. Already this year, she has been going out with friends less, which has benefited her mental and physical health as well as her wallet.

“My first impulse is always ‘Let’s go to happy hour,’” she said. “I’m kind of just redirecting and trying to find other activities.”

She’s grateful, she said, that she only has graduate school loans; thanks to scholarships and help from her parents, she didn’t have to take out undergraduate loans.