{"id":60541,"date":"2023-09-13T14:25:49","date_gmt":"2023-09-13T18:25:49","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/student-loan-payment-resumption-will-be-a-major-financial-shock-for-renters-moodys-says\/"},"modified":"2023-09-13T14:25:54","modified_gmt":"2023-09-13T18:25:54","slug":"student-loan-payment-resumption-will-be-a-major-financial-shock-for-renters-moodys-says","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=60541","title":{"rendered":"Student loan payment resumption will be a \u2018major financial shock\u2019 for renters, Moody\u2019s says"},"content":{"rendered":"
\n

Student loan payments are expected to resume in October and will have a big impact on young renters, according to a new report.<\/p>\n

Borrowers\u2019 first student loan bill will be due sometime in October, after a pause of more than three years, which started at the beginning of the coronavirus pandemic in March 2020. Interest already began accruing on September 1.\u00a0<\/p>\n

\n

\u201cThis will be a major financial shock and additional burden to younger renters or millennials, especially those in the low- and moderate-income group who are rent burdened,\u201d Moody\u2019s Analytics said in a new report.<\/p>\n

As many as 22 million borrowers will need to resume making payments of close to $275 a month, a separate study by the company found.\u00a0<\/p>\n

Assuming that total household income does not change by the end of the pause, and the percentage of total income needed to pay rent also stays unchanged, \u201cthe monthly reductions from resuming student loan payments will slash any financial buffers,\u201d Moody\u2019s said, \u201cforcing households to cut back on discretionary spending or face difficult housing decisions such as trading down\u201d to cheaper and older rental housing or even living with family and friends to avoid becoming homeless.<\/p>\n

\u201cOn average, a median-income household spends about 30% on renting an average-priced apartment unit in the United States,\u201d Moody\u2019s noted. \u201cFor places where large rent disparities exist between Class A and Class B\/C units, taking $275 out of the monthly budget may force families on the margin to trade down in order to restore the lost wages now allocated for student loan payments.\u201d<\/p>\n

Classes A, B and C are categories in which homes are organized based on when they were built. Class A refers to homes built recently, are well maintained, and are occupied by high-income earners. Class C refers to homes that are typically older than 30 years old, don\u2019t have the best amenities, and are occupied by middle- to lower-income families, or senior citizens.<\/p>\n

Going down a class would save renters around $610 in rent, Moody\u2019s calculated. Assuming that the median monthly income across the U.S. is $6,017 for the population aged 25 to 44, going from living in a Class A unit to Class B or C would net a surplus of $335, which could offset paying their student loan debt payments.\u00a0<\/p>\n

Looking at local rental real-estate markets, Moody\u2019s found that going down a class had an outsized impact on renters\u2019 wallets in several cities. Going from a brand-new building packed with amenities to an older apartment building could save renters over $600 in rent in some parts of the U.S.<\/p>\n

The metros with the highest share of population between the ages of 25 and 44 were Suburban Virginia, Denver, San Francisco, Washington D.C., and Northern New Jersey. <\/p>\n

For renters in Suburban Virginia, who have a median income of $9,919, trading down from a Class A rental to a Class B or a C would give them a surplus of about $417, having saved about $700 on their rent. <\/p>\n

In San Francisco, where the median income is $10,935, trading down would yield a surplus of around $1,276, having saved about $1,550 on rent.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Student loan payments are expected to resume in October and will have a big impact on young renters, according to a new report. Borrowers\u2019 first student loan bill will be due sometime in October, after a pause of more than three years, which started at the beginning of the coronavirus pandemic in March 2020. Interest […]<\/p>\n","protected":false},"author":1,"featured_media":60542,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-60541","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nStudent loan payment resumption will be a \u2018major financial shock\u2019 for renters, Moody\u2019s says | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Student loan payments are expected to resume in October and will have a big impact on young renters, according to a new report. 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