More than 40 million Americans have student loan debt, and student loans outstanding nationwide are more than $ 1.5 trillion. The government’s hiatus in federal student loan payments is about to expire and leaves Millions of borrowers grappling with how they’ll pay off their debts in 2021.
But Brandon Leake, a 28-year-old husband and father, found a lucrative way to wipe out his college debt this fall. He is the first spoken word poet to land in first place on the NBC show.America’s Got Talent“- and win the grand prize of $ 1 million.
“The moment I finally get my winnings, my plan is to pay off my student loan debt,” Leake said.
The show said the award is “payable as a financial annuity over 40 years or the entrant may choose to receive the present value of that annuity”. Leake said he would opt for the flat rate payment.
“America’s Got Talent” winner Brandon Leake (center), with presenter Terry Crews (l) and judge Howie Mandel (r).
He said he was often reminded of how much he owed.
“I would reach out all the time,” said Leake. “‘Hey, you know you owe the government more than $ 30,000 for the student loan you took out – when will the money come back to us?”
Leake said those calls were suspended this spring. Like most borrowers, Leake hasn’t paid his student loan bills since then.
“There was a pause in all student loan payments that had to be made, which was a huge blessing, I know, not just for me but for a host of other people,” he said.
In March, under the CARES Act, the Ministry of Education suspended debt payments on federal student loans, suspended accrued interest, and suspended the collection of defaulted federal loans. In August, President Donald Trump signed an executive order that extended relief efforts until the end of the year. This payment pause due to the Covid 19 crisis is now expected to end on December 31.
More of Invest in you:
Students say raising the minimum wage to $ 15 an hour would be a game changer
Woman works 5 jobs to stay afloat after being laid off. It is still not enough
37 million student loan borrowers will have to resume payments in January
Leake worked as an academic advisor at a local community college in his hometown of Stockton, California before his big win. He said he has alumni and some friends who are in debt of $ 50,000 to $ 100,000 or more and don’t know how they’ll make their payments next year.
“There used to be a time when studying gave you a secure position where you could pay off financially within 15 to 20 years,” said Leake. “That’s not the case, that’s no longer the economy we live in.”
Adam Minsky, a Boston-based attorney who specializes in student loan law, agrees.
“Between job loss, vacation and income cuts … related to the pandemic and recession, there is a great concern that people will not be able to afford their normal monthly payments,” he said.
Brandon Leake, America’s Got Talent winner
Measures could be taken in the next few weeks to ease the burden on borrowers. President Trump could extend the break before the end of his term in office. Or President-elect Joe Biden can cancel some federal student loan debt when he takes office. Experts say borrowers shouldn’t rely on it. Instead, they should prepare for 2021.
“Find out what type of loan you have and what your options are when the payments come due in January, and start working on a plan now – don’t wait,” Minsky said. “By the time that bill hits, there will be literally tens of millions of borrowers trying to figure out what to do.”
Borrowers already have a few options to facilitate federal student loan payments. Switching to a different repayment schedule – an income-based one – lowers monthly payments by increasing the time it takes to pay off the entire loan balance. For those who are unemployed and not eligible for zero payment on this plan, applying for a postponement of unemployment for student loans is another option, Minsky said. And with interest rates at all-time lows, it can be a good time to consider refinancing a personal loan, especially if you have good credit.
Leake had an income-based repayment plan, but even before the pandemic, he said he often found it difficult to make payments. While supporting federal student loan forgiveness, he “doesn’t expect it to materialize,” he said.
Instead, the spoken word artist decided to literally put his words into action. “I’m trying to make the smartest decisions right now,” said Leake, who is now fully focused on his artistic career. His first financial move will be to use his America’s Got Talent profits to wipe out his debt.
Unfortunately, most student loan borrowers cannot rely on this type of windfall.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.