Stacey Shadoff found herself unemployed after the closure of Dress Barn, where she worked part-time as an executive assistant, towards the end of December last year. Two months later, all hopes of quickly finding another job were dashed after a statewide shutdown of non-essential businesses was put in place due to the rapid spread of the coronavirus.
In addition to losing his job and worrying about his elderly mother’s future health, Shadoff had another worry: his student debt of $ 220,000.
“I don’t think I knew 100 percent what I was getting myself into,” Shadoff said. “I wasn’t prepared for anything later. If I had understood better, I would have made different decisions.
The previous COVID-19 relief bill temporarily suspended federally-held student loan payments – as well as interest – but the latest package offers no such relief, meaning that from January, borrowers will have to start repaying loans.
Shadoff is one of more than 43 million U.S. borrowers in debt even as 22 million jobs have been lost due to the economic fallout from COVID-19, jobs that will likely be take years to to recover.
Early signs suggest that the economic outlook for student loan borrowers is bleak.
A national survey of nearly 60,000 student loan borrowers in all 50 states from November 30 to December 4, 2020 found that three-quarters of respondents are not financially secure enough to start paying off their student loans again before June 2021 or later.
The survey conducted by Student Debt Crisis, the nation’s largest student debt advocacy organization, and Savi, a social impact technology company, found that while short-term federal relief was generally helpful to borrowers, most face long-term challenges that will linger for months. or years to come.
In Nevada, a state with one of the highest unemployment rates in the country, about 63% of those polled said they defaulted on a student loan or were unable to make payments. monthly student loans since the start of the pandemic.
Almost 68% of those polled in Nevada said they had lost their jobs, cut their hours or been put on leave due to the pandemic. More than half of the respondents rated their financial well-being as bad or very bad.
Over the past decade, student debt has doubled, according to Federal Reserve datafrom $ 855 million in collective debt to $ 1.7 trillion.
This debt now follows Americans as they age. Older Americans – 65 and over – were fastest growing student loan-holder demographic, government says report as of 2016. Borrowers aged 50 and over have significantly higher default rates on federal student loans, according to the report.
Shadoff, 49, started school later in his life and graduated from the University of Nevada, Las Vegas with a degree in psychology in 1998 before earning a master’s degree in Marriage and Family Therapy from the University of San. Diego in 2000.
The private and federal student debts she contracted as a result of these degrees followed her for 20 years. What started as a debt of just over $ 100,000 then climbed to $ 220.000 supplemented by interest and collection costs.
“You don’t earn enough to pay off anything directly outside of school and when you get the chance you have all those extra penalties and interest that you didn’t have. Nobody graduates from college and immediately becomes CEO, ”Shadoff said.
Shadoff became a social worker, but quickly left due to burnout and low wages that couldn’t cover her student loans and living expenses in San Diego.
“I found out that I didn’t want to do any social work anymore. Part of the reason is it’s just heartbreaking. I couldn’t do it anymore, ”Shadoff said.
A career in human resources followed during which she worked with large companies such as Station Casinos, MGM Resorts International and AutoNation. For a time, she held high paying positions as the Director of Human Resources at Seven Hills Hospital and as a Human Resources Consultant for Dignaty Health, but degenerative disc disease and major surgery left her behind. prevented them from working full time.
Shadoff tried to set up an income-based repayment plan to handle the monthly loan payments, but this still required her to pay $ 600 per month that she couldn’t afford to pay with rent and rent. childcare for her daughter.
“It’s embarrassing and I’m ashamed it got so bad,” Shadoff said. “My debt-to-income ratio is out of control. “
In 2018-19, 46% of Nevada college graduates had student loan debt, according to the Institute for College Access and Success. The average debt of a Nevada graduate in 2018-19 was $ 21,254, the third lowest in the country.
However, about 10% of Nevada graduate student loan debt was non-federal private debt which is often more expensive and has less protection for consumers than federal debt.
Calls for student debt cancellation escalated during the pandemic, as millions of people lost their jobs and saw their hours cut. President-elect Joe Biden has previously backed a plan to provide $ 10,000 in student loan forgiveness due to the pandemic.
Advocacy groups like Student Debt Crisis have called for more, arguing that with executive action, Biden could wipe out federal loans not just of $ 10,000, but $ 50,000 or even all of it. what borrowers owe.
“A huge problem that we are seeing is that even though we see the cost of college going up, we are not seeing a pay rise,” said Natalia Abrams, director of Student Debt Crisis.
In Nevada, the most common occupations with student loan debt according to the Student Debt Crisis Survey were education services (about 21%) and health care and social assistance (28%), professions with high professional and academic requirements.
“What we’re seeing is student debt is finally getting the national attention it really deserves,” said Lindsay Clark, director of external affairs at Savi. “We are finally witnessing national conversations around this issue. “
“Behind the numbers, there are people who find it difficult to pay their rent and put provisions on their tables. “
In Nevada, about 20 percent of student loan borrowers said they had experienced food insecurity since the start of the pandemic, according to the survey. Two-thirds of respondents said they face increased anxiety, depression or stress due to the burden of student loans.
Another concern is that once the suspension of student loan payments is over, delinquent student loans will be eligible for a payday garnishment.
“Unless something is done, we’ll see borrowers defaulting because they can’t pay off student loans and we’re going to spiral downward from there,” Clark said.