Public school music teacher Ashley Dawn found another way to spend her grace period savings after three years of pending student loan payments. She used that extra cash to pay off a $10,000 credit card debt that had haunted her for a decade.
“If my student loan debt hadn’t been suspended, I wouldn’t be able to continue in this life. I’m afraid I’ll have to pile on the debt again,” she said of her credit card debt. She said she couldn’t imagine being able to pay unless she found another job on top of “an already very time-consuming and already very stressful career.”
She earns about $50,000 a year and her husband earns about $45,000 as a civil servant, but they still live paycheck to paycheck. Dawn and her husband, Jonathan, who live near Albany, have been paying off more than $160,000 in student loans each month since graduating from Empire State College of New York in 2014 with a master’s degree in education. In March 2020, the Trump administration paused, announcing that federal student loan borrowers may stop making monthly payments as part of a pandemic relief effort.
The couple paid nearly $900 a month, and Dawn had an income repayment plan that adjusted payments according to the borrower’s salary.
With the moratorium ending in late August and President Biden’s debt forgiveness proposal rejected by the Supreme Court, the Dawns and millions of others face the reality of resuming payments on those loans.
For many people 43.6 million For borrowers with federal student loans, the three-year moratorium created an economic cushion that allowed them to use the money for other purposes, such as buying a home, paying off credit card debt, supporting family, overdue medical procedures, and booking vacations. They are now figuring out how to cut these payments to stay within budget.
The Dawns said they always thought they would eventually have children, but the burden of student loan debt changed their minds. For now, two dogs, Mika and Oscar, and two cats, Ellie and William, will suffice.
“That conversation is like being taken off the table forever,” said Dawn, 33. In addition to monthly expenses such as her mortgage and car payments, Dawn has Crohn’s disease, adding to her financial stress.
The couple said they expect the new monthly payments to be about $800, calculated on an income-based repayment plan. This situation may change with the Department of Education’s new IDR options. Save or SAVE with Valuable Education Planconsidering income and family size.
Before her payments were suspended, Dawn relied on her credit card for unexpected emergency room visits, veterinary bills, medical copayments and new car tires. She used the credit to replace her water heater, partially cover her car insurance payments, and put a new transmission on her husband’s car. Within the last 6 months, she has paid off her credit balance and utilized her debt settlement program to close the card.
For Chantel Anderson, 27, the suspension was a lifeline to support her mother and avoid eviction. When Anderson was growing up in Philadelphia, the pair would fight and jump from apartment to apartment until they kicked them out. They ended up spending a week at a homeless shelter just before she started college. Her mother lost her job earlier that year, and the then 18-year-old Anderson couldn’t afford to attend college, so she postponed her first fall semester of college. Ms. Anderson, who lost most of her property in her eviction, relied on donations from people close to her, including a school guidance counselor, to furnish her dormitory.
Anderson secured financial aid and student loans to study political science at Eastern University while continuing her studies and other work, but graduated in 2018 still $43,000 in debt. The suspension freed him $455 a month to cover his mother’s phone bill and some car repairs. Anderson also helped his mother buy groceries, medicine, gasoline and cat food. If these expenses can be handled, the mother can use all of her income to pay rent and utilities.
Anderson’s first full-time job out of school was at a veterinary hospital, with an annual salary of $32,000, and the hospital provided housing at the time. Her working hours were cut when the pandemic recession hit. She paid off her last student loan in full in March 2020, and after that she paid $50 a few more times each month. But when she found out she would lose the house she lived in, she stopped paying her debts to cover rent and other expenses.
The suspension allowed her to live in a three-bedroom high-rise apartment with a pool and gym, amenities she never thought she could afford, and pay $500 a share in the monthly rent of her three roommates. She bought her car, which made her errands easier and covered about $400 out-of-pocket for unforeseen health issues and medical procedures.
When Mr. Biden’s debt relief plan was announced last August, some borrowers were shocked.
“That day was crazy for me,” said Anderson. She believed the plan would cut federal student loans in half. Her relief quickly gave way to skepticism as Republican lawmakers filed a series of lawsuits to block the plan.
Anderson expects her monthly bill to remain around $455 when payments resume, plus $250 a month for car and credit card payments. She works as a data manager at a nonprofit, increasing her income to more than $60,000 a year, and she signed up for the Public Service Loan Forgiveness Scheme (PSLF) last October, but she’s already started cutting certain expenses.
She stopped going to therapy to save money on her out-of-pocket expenses and consulted her mother about not getting much help. Ms. Anderson said she plans to sell the car in case of an emergency.
She still helps her mother with some of the living expenses. Phone bills, petrol to commute to the nursing home part-time job, and sometimes even groceries. But her mother was already behind on her rent and her landlord filed eviction papers.
“She dated in court,” Ms. Anderson said. “The judge dismissed her case because her landlord didn’t show up. I thought, ‘Thank you Lord, we still have time.’
lifestyle benefits
For other businesses, the moratorium has freed up funds for items like home renovations and vacations. Elizabeth Burton and her husband Kyle owed about $175,000 in private and federal student loans. The moratorium saved a couple in Manchester, New Hampshire, about $650 each month. Her schedule as an ultrasound technician allowed her to stay home during the day, and during the pandemic, she also saved $1,200 in childcare costs and allowed her 8-year-old and her 5-year-old to stay home.
Burton, 39, and her husband, a sales representative, 38, still had to pay $500 a month in private loans, but the excess money allowed them to install a second bathroom in their home, pay off their credit card debt, and book an eight-day family trip to Disney World.
Ms. Burton and her husband now have higher-paying jobs, and believe that an income-based repayment plan will result in higher bills than before.
“I don’t have the money to send my kids to college,” Mr. Burton said. “I’m still going to keep paying my debts. But you know my son is eight years old. He has 10 years left on the federal loan. He doesn’t have money. He’ll either have to take out a loan, or stay at home, or get a scholarship — I’m leaving him with nothing.”
The Dawns also used some of their student loan savings to book vacations for July 2025. They plan to celebrate their wedding anniversary in Jamaica and want to soak up the tropical atmosphere and explore marine wildlife. The couple is on a travel payment plan that allows a small payment to be split over her three years. Dawn said it was a dream vacation for them. But now that the suspension of payments has ended, he said he’s considering ending that as well.
