STUDENT LOAN RESTART
Knowledge may be power, but it’s also expensive
Get ready for next month's financial shake-up! As 46M Americans gear up to start repaying a whopping $1.6 trillion in student loans to Uncle Sam, these borrowers (primarily Millennials and older Gen Zs) are going to feel the financial squeeze. These young workers are facing less financial security than their older counterparts did at the same age between the trifecta of wage stagnation, higher costs of housing, and higher costs of everyday essentials. And now they’re adding student loan repayment to the mix. This issue sheds light on how these factors impact their financial journey, from opting out of streaming services, skipping the luxury splurge, falling further behind with BNPL payments, buying a car, saving for a house, and the road to retirement. However, those struggling to afford their payments have a few options to service their hefty debts. Let's dive in.
SAVE PLAN (SAVING ON A VALUABLE EDUCATION)
The Biden Administration’s new SAVE plan (replacing the existing REPAYE income-driven repayment (IDR) plan) is designed to reduce borrowers’ monthly payments by half, allow many borrowers to make $0 monthly payments, and ensure borrowers don't see their balances grow from unpaid interest. Under SAVE, borrowers whose original loans were under $12k receive forgiveness after 120 payments. Loans over $12k will need to make payments for an additional year for each $1000. The catch is that the maximum time to receive debt forgiveness is 20-25 years of payment.
— Erin, 26, IL (Cassandra Collective)
HIGHWAY BENEFITS
As the impending payment start date approaches, Highway Benefits, a fintech startup dedicated to assisting employers in offering student loan repayment benefits, has observed a notable increase in interest. Following the U.S. Supreme Court's rejection of President Biden’s proposal to forgive millions of student loans, employer enthusiasm for this benefit is on the rise as adopted by the likes of Google, Aetna and Staples. Through a software platform and verification process, the company facilitates the direct transfer of funds from employers to loan servicers. Programs that integrate 401(k) contributions with student loan payments are also in the mix.
— Allie, 27, MA (Cassandra Collective)
COLLEGE COST-CUTTING STRATEGIES
In recent times, the journey from high school to college has taken a new turn, as highlighted in Cassandra’s Future of Education report revealing some eye-opening insights: 54% of Gen Zs believe college isn't worth getting into debt for, and a mighty 74% wish they could test the college waters before diving in financially. But that's not all – GoBankingRates shared another perspective. Over 20% of Gen Z are considering community college as an alternative, and an impressive 62% are already putting money aside for higher education, showing their determination to pave their own way.
With 62% of Gen Zs feeling guilty when they spend a lot of money on themself, check out Cassandra’s latest report, The September Issue: Luxury Edition, for more on what impacts Gen Zs spending habits - available to members.