Welcome to Taking Stock, a space where we can take a deep breath and try to figure out what the COVID-19 economy really means for our finances. Every month, personal finance expert Paco de Leon will answer your most difficult, emotionally-charged questions about money. This year has forced many of us to reprioritize our finances, and there’s no clear road map for getting through the pandemic yet — but Taking Stock is here to help us figure it out together.
Last week, we covered what to do if you feel stuck between continuing to pay down student debt and instead using that money for a rainy day fund during COVID-19. This week, Refinery29 spoke to readers with student debt who are grappling with how the pandemic has shifted the way they deal with or look at it.
Ann, 24, New Jersey
Ann received her undergraduate degree in 2017. Eight months later, she started a master’s program, which she finished last December. “I graduated with a total of $114,000 [in debt],” she says. “I’ve been working full-time since January.”
Right now, she earns around $2,400 a month and has $109,000 of debt remaining. Her federal student loan payments are paused thanks to the COVID-19 suspension, in effect until January 1st 2021, but before that, she paid around $600/month in private loans and $300/month in federal loans.
When she received her first $900/month bill after graduating, she was shocked. “I knew what I had gotten into, but I’d never expected it to be so much per month,” she says. “I did try to lower it, but I was told I was ineligible for multiple types of repayment plans. With my private loans, I tried to get my payment reduced, but they told me I couldn’t because not all of my loans were at the same place in repayment status.”
Getting a lower monthly payment or refinancing the loans has been difficult, because there’s often a backwards logic applied to who qualifies. “I’ve tried to refinance through multiple companies and banks, yet no one will refinance me because of my debt-to-income ratio. But my only debt is my student loans — which is what I’m trying to fix.”
Right now, she has about $3,500 in savings. “I had more, but I put a large chunk of that towards my loans.” Knowing she has around 20 more years of being in debt is a huge weight. “[My partner and …read more