Federal Rescue Efforts Made to Help Student Debt Crisis During the Pandemic
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The coronavirus pandemic undercut the nation’s economy and has worsened the student debt crisis. In 2019, the total amount of national student loan debt was over $1.5 trillion, and that number is only growing more significantly in times of crisis. Despite certain relief efforts to help mitigate student financial pressures during the pandemic, individuals are not satisfied and are waiting for the Biden Administration to intervene more extensively.
“Even before the coronavirus pandemic, many Americans were struggling to pay their student loans, and the public health crisis has made a bad situation much worse for borrowers,” Don Baylor Jr., a senior associate at the Casey Foundation, said in Making the Case.
Federal student aid provided institutions and students with relief packages, adjusted the federal financial aid requirements and set low-interest rates on federal student loans. Typically, students accrue interest while in school; however, from March 2020 to December 2020, interest rates on Direct Unsubsidized loans were lowered to 0%.
The Cares Higher Education Emergency Relief Fund provided over $14 billion in funding to higher education. Within the past few months, lawmakers have instilled the HEERF II act, allowing institutions to offer financial aid packages to those who COVID-19 directly impacted. The second provision authorized by the CRRSAA Act allocated $81.88 billion to support education, in addition to over 30 billion previously allocated to education funding last spring.
Latest Updates to the HEERF II Act:
On March 19, 2021, the US Department of Education announced new assistance to institutions allowing them to use funds for the pandemic duration.
On February 25, 2021, the US Department of Education updated the HEERF aid program’s eligibility criteria and the Supplemental aid (SAIHE) program.
On January 14, 2021, the US Department of Education added $21.2 billion to higher education institutions to supplement formal learning during the pandemic. The full press release is available here.
At Marist, Student Financial Services has been working with students directly since they received the first round of Cares Act funding last spring. In early March, students eligible were notified through email and set up a direct deposit payment or choose to add the funding to their bill balance. If students did not enroll to receive the financing electronically but were still eligible, the budget was given to them automatically.
Marist Student Financial Services outlines the criteria of the 3,400 students who will receive funding if they have not already:
Enrolled in Undergraduate or Graduate degree program for Spring 2021
Submitted FAFSA by Feb. 24, 2021
Proof of US Citizenship has been submitted to Student Financial Services ( f required)
$75,000 or less EFC established on the 2020-2021 FASFA
In a study conducted by the Pew Research Center, around 90% of federal student loan borrowers have taken the option to pause their monthly payments during the pandemic. A majority of those borrowers said they would be unable to repay their student loans again in the coming months. The research indicates borrowers are still struggling even when given federal assistance. The upcoming graduating class, the second class to enter the workforce during a pandemic, is expected to exacerbate the upsloping debt curve; they are entering an unstable labor force battling with lower wages and increasing unemployment claims.
Federal rescue efforts for students can help individuals offset the cost of damages because of COVID-19 related financial fallout. Still, many researchers worry that the burden of the student loan debt during crisis time will be of more significant harm to financial security to the nation than in previous years. The Biden Administration outlined their approach to the student debt crisis in Biden’s campaign, and borrowers are waiting for executive action for further student loan assistance.