2021 agenda item: Alleviating college financial agony
Whether you are a current college student or dealing with student loans you took out years ago, the coronavirus pandemic has created a special kind of angst. Here’s a look at how current students are being affected and some updates on what’s being proposed by the incoming Biden administration to help you deal with your existing student loan debt.
New research from AIG Retirement Services and EverFi, a financial literacy technology company, reveals the impact of pandemic’s uncertainty on today’s students. Caught between online learning and restricted campuses, students are suffering not only from a disruption in their education. The survey found that most students have anxiety about COVID-19 as well, and fewer than half feel prepared to manage their anxiety. So much for the happy, carefree days of college.
Even worse, nearly one-third of students reported that the pandemic has put extra financial stress on their families. And they were looking for more financial aid, scholarships and part-time jobs. More than half (57%) say they will have student loans at graduation, and more than a third say they have at least two credit cards.
Student Loan Repayment Problems
Student loans are now the second largest category of American debt. The only larger category is mortgage debt. At $1.6 trillion, outstanding student loan debt exceeds even credit card debt!
Those with balances have a bit of grace thanks to the CARES Act, the coronavirus relief law enacted last spring, and to an executive order extending the period in which borrowers can skip payments without interest. The amount skipped is being added to the end of the loan. That means many borrowers will be paying on those loans up until the time they should be considering retirement!
Even worse, that executive order ends on December 31, unless the president extends it or Congress includes a similar provision in another stimulus bill. Of course, such relief depends on a lot of political change in the two months until a new administration takes over. And with the Senate control still in question pending the outcome of the Georgia run-off elections, there may not be enough votes to pass new legislation.
But there is hope for student borrowers in the proposals that are currently being made public.
Proposed Student Loan Remedies
President-elect Biden has said publicly that he supports the earlier proposed House stimulus bill, which would extend the suspension of payments until September 2021 and immediately forgive up to $10,000 of student loan debt.