The latest stimulus bill passed by Congress on Dec. 21 did not include an extension on the payment and interest freeze for federal student loan borrowers. Universities in the Upstate are urging students to stay alert on the latest news about the repayment schedule when the freeze thaws on Jan. 31, 2021.
If an extension is not given, then 42 million borrowers will have to resume payments to chip away at their student debt, according to CNBC.
Back in March, the U.S. Department of Education provided a break to student loan borrowers during the economic crisis caused by the novel coronavirus. Then, in early December, Secretary of Education Betsy DeVos announced an extension of the freeze until the end of January.
The Department of Education currently allows borrowers to defer payments or enter into forbearance if they need a break from their repayment plan. Doing so, however, causes interest to still accrue. In the end, the borrower will have to pay back more than was due when the borrower deferred payments.
Brad Pochard, associate vice president for enrollment and dean of admissions and financial aid at Furman University, said the freeze was a good move. “It’s a good thing for the borrower to provide some relief at a time in which finances might be tight,” he said.
“Most students are taking advantage of the legislation that was passed from last March and now has been extended another month to the end of January,” said Martin Carney, director of financial aid at Greenville Technical College.
Like many universities and colleges, Greenville Tech works with a third-party company that assists students and graduates with student debt, according to Carney. “These companies have been contacting students and making sure that students are aware of the option,” he said.
If borrowers are concerned about repaying their loans during the ongoing pandemic, Carney recommended they work with the loan servicer about what plans are available to them. “In many cases, the student can get a lower monthly payment,” he said.
Above all, though, borrowers need to contact someone if they are concerned about their loan repayment. Avoiding defaulting on the loan and delinquency over not paying is paramount.
For Pochard and officials at Furman, a key to the college experience is ensuring that it’s a safe and smart financial choice. “Our role in financing and undergraduate education is to make sure they’re making good, sound decisions,” said Pochard.
Borrowers should also keep a watch on the new administration, according to Carney. He said that since student debt had been mentioned in the campaign of President-elect Joseph Biden Jr., the subject may come back around in the near future.
“If [borrowers] can’t keep their finger on the pulse of the media covering that information, then stay in touch with their school or their loan servicer for any new options that might become available,” said Carney.