Students loan payments are back. Here's how Minnesotans are adjusting their budgets
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Student loan payments resume this month following a three-year pandemic pause and many Minnesotans are already feeling the squeeze.
Driving the news: Most borrowers who responded to a recent Axios Twin Cities question on the return of payments said making room in their budget for the monthly bill will require spending cuts or extra income.
By the numbers: More than 800,000 Minnesotans had outstanding student loan debt as of June 30, owing a cumulative $27.1 billion.
Between the lines: Americans with student loan debt tend to be younger and have lower incomes.
- Those factors could make adding a bill back into the budget even more difficult for many.
What we're hearing: Readers who responded to our survey shared plans to reduce spending on groceries and eating out, put off home projects, and cut back on "mutual aid" donations meant to help others in the community.
- Some said they'd need to seek a second job or delay other major life goals to make ends meet.
What they're saying: "I'm definitely worried about being able to make that payment consistently in light of inflation and the general costs of living," said Sarah, a 40-year-old borrower from St. Paul with more than $50,000 in debt.
Zoom in: For 27-year-old Minneapolis resident Becca Svenson, freeing up $700 a month for the $70,000 balance she and her husband share will mean pausing efforts to pay down other debt faster and cutting other monthly spending by $100.
- "Our next financial goal was getting ready to start a family, and though I don't think it will stop us forever, it will definitely push back our timeline," said Svenson, who works as a nonprofit program evaluator.
Of note: Loans began accruing interest again last month.
- Sarah, who requested that her last name not be used when sharing personal financial information, said the amount of interest she's accrued in just the last month alone is nearly equal to her minimum monthly payment.
What's next: As of early September, more than 73,900 Minnesotans had applied for the federal SAVE Plan, a new income-driven repayment option that calculates monthly loan payments based on income and family size.
- Chris Lunde, a 33-year-old from Minneapolis with $75,000 in debt, told us he'll have to expand his cottage baking business, something he'd rather keep a hobby, or find another second job if he's not approved.
What we're watching: Some retailers — including Target — have expressed concerns that tighter budgets for millions of borrowers will result in less consumer spending.
Yes, but: The broader picture still points to a strong American consumer, and some experts say fears of a significant impact on overall household spending are overblown, Axios' Hope King writes.
Go deeper: How to find student loan information before payments resume