Americans with student debt are bracing to start making payments again after more than two years.

During a forbearance period that started early in the pandemic, those with a piece of the $1.7 trillion student debt burden could set aside at least one of their financial worries, allowing them to reach major life milestones, boost their financial health and splurge on vacations.

Now, they’re preparing for the grace period to end Aug. 31. While President Joe Biden could once again extend the deadline, or even announce a forgiveness plan, the date to start paying again is creeping closer with no clear sense that there will be action from the White House.

Without loans hanging over their heads, some Americans have dramatically improved their credit scores, paid down other debt and taken vacations. Others bought houses, expanded their families or boosted savings.

Jennifer Nagle, a 38-year-old in Michigan who works in IT, was able to go on vacation for the first time since 2012. She graduated from college with more than $60,000 in student loans, two-thirds of it federal, and was paying about $600 a month before the pandemic.

This summer, she spent time at an Airbnb on a lake in rural southwest Michigan for a friend's 40th birthday — the kind of trip she had felt "cheated out of" due to her debt.

"It's hard to save up money to go on vacation," she said. "This felt like I could put down a heavy burden and just be."

Financial Lifeline
One study by the California Policy Lab and Student Loan Law Initiative found that 44% of borrowers reduced their use of credit cards or other revolving credit during the forbearance period. Meanwhile, credit scores increased by an average of 30 points.

The Federal Reserve’s Survey of Household Economics and Decisionmaking also showed that 73% of people with education debt felt they were “doing at least okay financially,” up from 66% in 2020 and 64% in 2019.

For Jennifer Le, a 30-year-old architectural designer in Washington, the pause was a welcome break from financial stress.

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