"In March, as it rapidly became clear that the coronavirus pandemic would upend our lives, the U.S. Department of Education offered student loan borrowers a break from their monthly payments.
They accepted.
Less than 11% of people with federal student loans are repaying them during the pandemic, according to data analyzed by higher education expert Mark Kantrowitz. That means about 4.6 million out of 42 million borrowers are continuing to pay down their debt. " …
This was a very kind offer for these grads. They will still have to pay the total amount owed, but their payments were in forbearance until Sept 30. In addition no interest accrued during that time.
The title of this thread implies that this is a bad thing. I’m sorry, but it was offered and over 90% of loan holders took the offer. Many will begin their payments soon…and some still are not employed.
If I were still in financial aid, I would be encouraging my grads to pay if possible. It’s a great way to knock out some of the principle. But … I think the high percentage of borrowers not paying right now is probably a reflection of their financial situation (current and/or perceived future). It’s really hard out there right now for so very many people.
I didn’t realize that still paying on loans was going to principle only, correct? D and SIL are still paying, 2,700 a month so that could make a big difference. How long is the no interest good for?
Actually, I was wrong to make that blanket statement. Here is how it works: “During the period of 0% interest (March 13, 2020, through Dec. 31, 2020), the full amount of your payments will be applied to principal once all the interest that accrued prior to March 13 is paid.” For students with little (or no, in the case of some subsidized loans) interest, it’s more likely that the money will go to principal.
Currently, the ‘no interest’ is until Dec 31.
One daughter is very grateful for the interest free period and is not paying her direct loan. She is paying her Perkins loan as it is not an interest free period. I’ve been helping her pay that as well with the hope that she’ll have it paid off in Jan or Feb. She is impacted by covid and would have trouble paying the full direct loan payment.
My other daughter is not paying her direct loan even though she’s employed and could pay it. Why? Because there was talk about the second covid relief package forgiving up to $10k of federal student loans and that’s about what she has left to pay. Also the dems are talking about loan forgiveness too (Warren and Sanders are talking $50k, which is nuts, but Biden/Harris are talking $10k, which is possible). Even if that doesn’t happen until mid 2021, she’ll still benefit from not making payments now. (saving for a down payment on a house)
It’s just a possibility. If she ends up paying it, so be it, but worth a shot to see what happens.
I doubt loans will be forgiven. Just my take, having followed financial aid matters for years.
That was the whole point of this. Allow those who have student loans to have interest free reprieve during these difficult months.
My kid bought a car with what he’s saving in payments. Got an interest free loan for the car, so he put a bit less down than he would have and is putting a little away for when he starts repayment. He’s paying as he goes to grad school so this works very well. He’ll have to pay a year longer but the same amount due to no interest accrued this year. It’s been a small bit of relief during these times.