The impact of student loan payments, due to resume in October, could set the housing market off track by at least a year, some housing experts believe. Student loan payments are set to pick up again in October after a 42-month payment and interest accrual pause, according to the Department of Education. Student loan interest began accumulating on September 1, 2023.
While the pause on student loan payments has helped some students build savings, housing costs have risen significantly over that period, with mortgage payments on new home loans more than doubling and rents rising about 27%, according to a recent Zillow report. "The pause on student loan repayments over the last three and a half years helped many households weather the pandemic and the high inflation environment that accompanied it," Zillow said.
More than 4 million student loan borrowers have enrolled in President Joe Biden's new Saving on A Valuable Education income-driven repayment plan as the start date for repayment nears. The SAVE plan could lower borrowers' monthly payments to zero dollars, reduce monthly costs in half and save those who make payments up to $1,000 a year, the White House said in a statement.
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