Those who attended local universities with a helping hand from Uncle Sam don’t have to pay anything right now, but the hiatus is expected to end in just over four months.
âThe vast majority of (former) students should start repaying,â said Charles Mayfield, director of financial aid at Northwest Missouri State University. “There are a few options, but they will be considered the exception.”
The US Department of Education began withholding federal COVID-19 loans on the more than $ 1.5 trillion it controls in March 2020, and President Donald Trump has maintained that at various times. During this time, no new interest is charged. No payment is due but can be made anyway to reduce the capital.
When he took office, President Joe Biden extended him until this month. Finally, Education Secretary Miguel Cardona announced in August a “final extension” until January 31, 2022. The cause of the break had ended, Cardona said, as the economy recovers from the impacts of COVID-19. The idea is that debtors can use this time to schedule renewed payments.
Mayfield and Cindy Spotts-Conrad, her counterpart at Missouri Western State University, each oversee thousands of accounts through the federal system, and it’s evident some of them haven’t made any payments since March 2020. According to their offices. respective, for the 2019-2020 academic year, North West graduates who have loans owed just over $ 25,000 on average. Western alumni with loans owed around $ 24,000 on average.
That’s well below the current US average of $ 36,900, but the national number has increased 326% since 1970, according to the George Washington University School of Education and Human Development.
âIt’s something that we generally wish was better,â Spotts-Conrad said. “You know, maybe less debt, students can get a college degree without going into debt that they usually are.”
It is feared that they will not do so once the abstention ends. This may be because they don’t have the financial means to pay, because they don’t realize they need to pay after almost two years of reprieve, or because they are simply refusing.
Default will ensue in these cases. Beyond the huge and dire financial consequences for individual borrowers – plummeting credit scores, garnishing wages, inability to qualify for many benefits – the government tracks the default rate on any given campus. If a borrower defaults within three years of graduation, this is reflected in that institution’s record with the Ministry of Education. There are plenty of reasons to avoid all of this.
âFor Griffons who are in the process of repayment, we have a dedicated staff member here, whose sole responsibility is to help those borrowers,â said Spotts-Corad, referring to Deana Wennihan, student loan repayment coordinator. of the MWSU. “So please contact our office if they would like any assistance in any way on any issue.”
During the 2020 presidential campaign, Biden pledged to find a way to eliminate at least $ 10,000 from every borrower’s obligations. So far, he has not kept that promise. In theory, Mayfield said, it could be done; The Department of Cardona owns the debt and all debt issuers have the power to write off what is owed. How much is forgiven, for whom and why would go through a complex scoring process.
âThere are people who are against this kind of an option and think it’s a short-term solution, but it doesn’t provideâ¦ a longer-term solution,â Mayfield said. âIt would put a bandage on it. So there is an argument both ways. I think we generally focus on the student and what kind of impact it would have for them. “