Student loan grace period ends
UC economist tells WLWT the change will be good for the economy
Student loan grace periods that were designed to help borrowers ease out of the COVID-19 pandemic are ending this week, WLWT reported.
Michael Jones, PhD, assistant professor of economics
Of the approximately 40 million people with student loan debt, approximately 7 million are in default.
Michael Jones, PhD, assistant professor of economics in the University of Cincinnati's Carl H. Lindner College of Business, said borrowers who are in default now will face consequences such as an inability to get additional loans. Money also could be withheld from paychecks, and credit scores could be damaged.
“Over the last several years, it's been out of sight, out of mind, because a lot of those borrowers haven't had to worry about the consequences,” Jones said. “But if you don't do that, if you don't get on a payment plan where you start making payments every month, then those reports are going to be going to the credit bureau.”
Jones thinks the changes will be positive for the economy.
“I think that'll be good, honestly, for the economy as a whole, because it means that those individuals are going to start paying those loans back,” he said. “And it will encourage future borrowers to know that if they don't pay those loans back, then there will be consequences as well.”
Featured image at top: A man using a calculator. Photo/Towfiqu barbhuiya
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