Student loan payments are expected to resume in October and will have a big impact on young renters, according to a new report. Borrowers’ first student loan bill will be due sometime in October, after a pause of more than three years, which started at the beginning of the coronavirus pandemic in March 2020. Interest already began accruing on September 1.
“This will be a major financial shock and additional burden to younger renters or millennials, especially those in the low- and moderate-income group who are rent burdened,” Moody’s Analytics said in a new report. As many as 22 million borrowers will need to resume making payments of close to $275 a month, a separate study by the company found. Assuming that total household income does not change by the end of the pause, and the percentage of total income needed to pay rent also stays unchanged, “the monthly reductions from resuming student loan payments will slash any financial buffers,” Moody’s said, “forcing households to cut back on discretionary spending or face difficult housing decisions such as trading down” to cheaper and older rental housing or even living with family and friends to avoid becoming homeless. “On average, a median-income household spends about 30% on renting an average-priced apartment unit in the United States,” Moody’s noted. “For places where large rent disparities exist between Class A and Class B/C units, takin …
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