The pause on student loan payments is ending. Can borrowers find room in their budgets?

In a good month, Celina Chanthanouvong has about $200 left after rent, groceries and car insurance. That doesn’t factor in her student loans, which have been on hold since the start of the pandemic and are estimated to cost $300 a month. The pause in repayment has been a lifeline keeping the 25-year-old afloat.

“I don’t even know where I would begin to budget that money,” said Chanthanouvong, who works in marketing in San Francisco.

Now, after more than three years, the lifeline is being pulled away.

More than 40 million Americans will be on the hook for federal student loan payments starting in late August under the terms of a debt ceiling deal approved by Congress last week. The Biden administration has been targeting that timeline for months, but the deal ends any hope of a further extension of the pause, which has been prolonged while the Supreme Court decides the president’s debt cancellation.

Without cancellation, the Education Department predicts borrowers will fall behind on their loans at historic rates. Among the most vulnerable are those who finished college during the pandemic. Millions have never had to make a loan payment, and their bills will soon come amid soaring inflation and forecasts of economic recession.

Advocates fear it will add a financial burden that younger borrowers can’t afford.

“I worry that we’re going to see levels of default of new graduates that we’ve never seen before,” said Natalia Abrams, president of the nonprofit Student Debt Crisis Center.

Chanthanouvong earned a bachelor’s in sociology from the University of California-Merced in 2019. She couldn’t find a job for a year, leaving her to rely on odd jobs for income. She found a full-time job last year, but at $70,000, her salary barely covers the cost of living in the Bay Area.

“I’m not going out. I don’t buy Starbucks every day. I’m cooking at home,” she said. “And sometimes, I don’t even have $100 after everything.”

Under President Joe Biden’s cancellation plan, Chanthanouvong would be eligible to get $20,000 of her debt erased, leaving her owing $5,000. But she isn’t banking on the relief. Instead, she invited her partner to move in and split rent. The financial pinch has them postponing or rethinking major life milestones.

“My partner and I agreed, maybe we don’t want kids,” she said. “Not because we don’t want them, but because it would be financially irresponsible for us to bring a human being into this world.”

Out of the more than 44 million federal student loan borrowers, about 7 million are below the age of 25, according to data from the Education Department. Their average loan balance is less than $14,000, lower than any other age group.

Yet borrowers with lower balances are the most likely to default. It's fueled by millions who drop out before graduating, along with others who graduate but struggle to find good jobs. Among those who defaulted in 2021, the median loan balance was $15,300, and the vast majority had balances under $40,000, according to the Federal Reserve Bank of New York.

Resuming student loan payments will cost U.S. consumers $18 billion a month, the investment firm Jefferies has estimated. The hit to household budgets is ill-timed for the overall economy, Jefferies says, because the United States is widely believed to be on the brink of a recession.

Despite the student loan moratorium, Americans mostly didn't bank their savings, according to Jefferies economist Thomas Simons. So they’ll likely have to cut back on other things — travel, restaurants — to fit resumed loan payments into their budgets. Belt-tightening could hurt an economy that relies heavily on consumer spending.

Noshin Hoque graduated from Stony Brook University early in the pandemic with about $20,000 in federal student loans. Instead of testing the 2020 job market, she enrolled at a master’s program in social work at Columbia University, borrowing $34,000 more.

With the payments paused, she felt a new level of financial security. She cut costs by living with her parents in New York City and her job at a nonprofit paid enough to save money and help her parents.

She recalls splurging on a $110 polo shirt as a Father’s Day gift for her dad.

“Being able to do stuff for my parents and having them experience that luxury with me has just been such a plus,” said Hoque, who works for Young Invincibles, a nonprofit that supports student debt cancellation.

It gave her the comfort to enter a new stage of life. She got married to a recent medical school graduate, and they're expecting their first child in November. At the same time, they’re bracing for the crush of loan payments, which will cost at least $400 a month combined. They hope to pay more to avoid interest, which is prohibited for them as practicing Muslims.

To prepare, they stopped eating at restaurants. They canceled a vacation to Italy. Money they wanted to put toward their child’s education fund will go to their loans instead.

“We’re back to square one of planning our finances,” she said. “I feel that so deeply.”

Even the logistics of making payments will be a hurdle for newer borrowers, said Rachel Rotunda, director of government relations at National Association of Student Financial Aid Administrators. They'll need to find out who their loan servicers are, choose a repayment plan and learn to navigate the payment system.

“The volume of borrowers going back on the system at the same time — this has never happened before,” Rotunda said. “It's fair to say it's going to be bumpy.”

The Education Department has promised to make the restart of payments as smooth as possible. In a statement, the agency said it will continue to push for Biden's debt cancellation as a way to reduce borrowers' debt load and ease the transition.

For Beka Favela, 30, the payment pause provided independence. She earned a master's in counseling last year, and her job as a therapist allowed her to move out of her parents' house.

Without making payments on her $80,000 in student loans, she started saving. She bought furniture. She chipped away at credit card debt. But once the pause ends, she expects to pay about $500 a month. It will consume most of her disposable income, leaving little for surprise costs. If finances get tighter, she wonders if she'll have to move back home.

“I don’t want to feel like I'm regressing in order to make ends meet,” said Favela, of Westmont, Illinois. “I just want to keep moving forward. I'm worried, is that going to be possible?”

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AP Economics Writer Paul Wiseman contributed to this report.

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The Associated Press education team receives support from the Carnegie Corporation of New York. The AP is solely responsible for all content.