Loan payment

Late student loan payment is ‘major relief’, but will it be reversed?

Bridget Bailey graduated remotely in May from the University of New Hampshire with a bachelor’s degree in psychology and, after four years of schooling, had student loan debt of around $25,000.

After a job opportunity in Boston failed due to COVID-19 complications, Bailey found herself financially benefiting from the U.S. Department of Education’s recently extended moratorium on mandatory student loan repayments.

“I’ve applied to a ton of jobs since February and still haven’t gotten an interview due to companies putting a hiring hiatus,” she said. “So I’ve been working part-time from home since graduating so I can pay off my loan when there’s no interest.”

U.S. Education Secretary Betsy DeVos announced the Office of Federal Student Aid’s freeze on mandatory student loan repayment, implemented March 20. In addition to the loan repayment suspension, DeVos asked the FSA to stop collections on defaulted loans and set interest rates at 0% for 60 days.

On March 27, Congress passed and President Donald Trump signed the CARES Act (Coronavirus Aid, Relief and Economic Security Act), which extended DeVos’ orders until September 30. On August 8, Trump ordered the extension of the moratorium until Thursday. , on December 31, a period which was modified at the beginning of December to last until January 31, 2021.

Andrew Pentis, student debt policy expert at Student Loan Hero, wrote in an email interview that the federal government’s continued extension beyond the new year is “a major relief” not just for borrowers, especially black and Hispanic borrowers, statewide, but also for recent graduates or those forced out of school due to the pandemic.

“These ex-students may return home to find a particularly difficult job market that would make student loan repayment seemingly impossible,” Pentis said.

There are 181,600 student borrowers living in New Hampshire, representing an average debt of more than $32,450, Pentis said. This contributes to the national student debt of approximately $1.68 trillion, as of April 2020, according to EducationData.org.

Only 30% of undergraduates borrow federal funds for their education, but that debt amounts to $1.54 trillion, or about 92% of the total debt figure, according to the website’s report.

“The 42.3 million Americans with federal student loan debt each owe an average of $36,520 for their federal loans,” the report said.

Prior to the COVID-19 pandemic in America, Michael Mawson earned his bachelor’s degree in journalism from UNH in May 2019. Mawson continued to make payments throughout the nearly eight-month moratorium period, saying that he had further reduced his charge on the interest on the loan. over $10,000.

“I’m glad it’s been extended because so many people have been affected by this unprecedented pandemic,” Mawson said of the moratorium.

Extending the moratorium until the end of next month “has been a relief for many Granite State borrowers,” said Christiana Thornton, president and CEO of the New Hampshire Higher Education Assistance Foundation.

“With the initial December 31 deadline approaching, we had begun to see an increase in the number of borrowers preparing for the eventual transition to repayment status,” she said.

Working closely with the FSA, Thornton and his team worked to relay relevant information about the moratorium end dates and expectations of Granite State borrowers.

Thornton added: “As the deadline approached, we were becoming very concerned about the prospects of potential borrower confusion should the relief end and then be reinstated by the new administration.”

Having accumulated $134,000 in student debt, Arianna Olkovikas, a graduate student seeking a master’s degree in secondary education at UNH, has been unable to earn an income in recent months due to the coronavirus. .

“I lost my job in the spring and couldn’t work in the summer because of that either,” she says. “I also can’t work right now because all my energy is going into my full-time, unpaid internship at a public school in New Hampshire.”

With that, she likes the prospect of federal relief after the moratorium: notably in the form of a possible loan cancellation by President-elect Joe Biden’s administration.

“I’m hopeful they will, but do I think they’ll follow? No,” Olkovikas said.

Pentis, the student debt expert, noted Biden’s past rhetoric during the presidential campaign and his support for different paths to partial loan forgiveness. However, citing likely conservative pushback on such legislation, “it’s likely that the new Biden administration would focus much of its early efforts on more immediate relief.”

“And extending the reimbursement freeze is the most effective way to do that. Again here, Biden would certainly prefer Congress to do this work for him,” he said. did in March, before the CARES Act codified its executive order, Biden could direct his education secretary to extend the moratorium at any time.”

US sensitivities Elizabeth Warren, D-Massachusetts, and Chuck Schumer, D-New York, the Minority Leader, called on Biden to cancel the first $50,000 of federal student debt for US borrowers through an action Executive, a resolution first introduced in September. of the general election.

Recently proposed by a group of 50 bicameral and bipartisan lawmakers, including Senators Jeanne Shaheen, D-NH, and Maggie Hassan, D-NH, a $908 billion COVID-19 relief package would extend the federal loan repayment freeze students beyond the new January 31. 2021 deadline April 30, 2021.

Grateful for the moratorium, Bailey said she is “hoping but not holding her breath” that the incoming presidential administration will relieve borrowers of at least some of the debt.

Until then, Bailey is stuck considering what could have been a post-graduation experience if not for the complications of COVID-19.

“I would have loved to take this time to travel and have fun, but instead I live at home and have to make professional decisions based on necessity rather than using my degree as I wanted to” , she said.