More than 40 million Americans have student loan debt and outstanding student loans across the country total more than $ 1.5 trillion. The government's hiatus on federal student loan payments is coming to an end, and millions of borrowers are grappling with how to pay what they owe in 2021.
But Brandon Leake, a 28-year-old husband and father, found a successful way to work off his college debt this fall. He is the first spoken word poet to land on the top of the NBC show "America's Got Talent" – and win his grand prize of $ 1 million.
"The moment I finally get my winnings, my plan is to repay my student loan debt," Leake said.
The show says the award is "payable as a financial annuity over 40 years, or the entrant can choose to receive the present value of that annuity." Leake said he would go for the flat rate payment.
"America & # 39; s Got Talent" winner Brandon Leake (center) with host Terry Crews (l) and judge Howie Mandel (r).
He said he was often reminded of how much he owed.
"I would be reached all the time," said Leake. "" Hey, you know you owe the government over $ 30,000 on the student loan you took out – when will the money get back to us? ""
Leake said those calls stopped 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 has been a great blessing not just for myself but for a host of other people," he said.
In March, the Ministry of Education suspended the payment of federal student loans, paused accrued interest, and halted collection of failed federal loans under the CARES federal law. In August, President Donald Trump signed an executive order extending relief through the end of the year. This payment break due to the Covid-19 crisis is now expected to end on December 31.
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Leake was 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 have a student loan debt of $ 50,000 to $ 100,000 or more and don't know how they'll afford their payments in the next year.
"There used to be a time when going to college would secure you a secure job position where you could pay you off financially within 15 to 20 years," Leake said. "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 and vacation, and declines in income … related to the pandemic and recession, there is deep concern that people cannot afford their normal monthly payments," he said.
Brandon Leake, America & # 39; s Got Talent winner
Actions could be taken in the next few weeks to ease the burden on borrowers. President Trump could extend the break before his term ends. Or President-elect Joe Biden can waive a 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 work on a plan now – don't wait," Minsky said. "By the time that bill comes in, there will be literally tens of millions of borrowers trying to figure out what to do."
Borrowers already have some facilitation options for federal student loan payments. Moving to a different income-based repayment schedule will lower monthly payments by increasing the time it takes to pay back the entire loan balance. For those who are unemployed and not eligible for zero payment on this plan, applying for a student loan deferral is another option, Minsky said. And with interest rates at all-time lows, it may be a good time to consider a personal loan refinance, especially if you have good credit.
Leake had an income-based repayment plan, but even before the pandemic, he often found it difficult to make payments. While he supports federal student loan grants, "he doesn't expect this to materialize," he said.
Instead, with the spoken word, the artist decided to literally put his words into action. "I'm trying to make the smartest decisions right now," said Leake, who is now focused on his career in the arts. His first financial step will be to use his profits from America's Got Talent to eradicate his debt.
Unfortunately, most student loan borrowers cannot rely on this type of windfall.
Clock The news with Shepard Smith Tonight at 7 p.m. ET to learn more about this winning strategy for paying off student loan debt.
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