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.
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.
Going down a class would save renters around $610 in rent, Moody’s calculated. Assuming that the median monthly income across the U.S. is $6,017 for the population aged 25 to 44, going from living in a Class A unit to Class B or C would net a surplus of $335, which could offset paying their student loan debt payments.
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