Delaware students still worried about loan repayments despite new extension

The hiatus on federal student loan payments has been extended once again by President Joe Biden due to the rapid spread of the omicron variant and the threat it poses to the economy. Delaware students feel some relief, but many are still hoping for the $ 10,000 forgiveness promised during Biden’s campaign.

“If I had 60% of my debts canceled, it would make the goal of repayment over the next few years much more realistic and potentially open the doors to graduate school,” said Stephen Boyd, 2021 University of Delaware graduate. “The amount of graduate school fees is one of the biggest things that keep me from going to school. “

Mr. Boyd’s federal loans are around $ 18,000, which isn’t bad compared to some of his fellow graduates, he said. Still, he was preparing to sell his car and downgrade to something he could pay directly in order to pay his loan repayments. Now he has said the extension until May will at least give him a little more time to get a feel for the finances he will be working with.

“It took me a while to find something that I felt comfortable with, so I didn’t start working until November,” he said. “During this process, I ate most of my savings, so I certainly wasn’t ready to start paying off my loans in February.”

He added that vacations at this time of year are an added layer of financial stress that puts many families “at a stalemate”, so starting repayments in the spring also gives him time to recover from those expenses.

According to research from Student Loan Hero, Delaware borrowers have an average student loan balance of about $ 36,000 (in federal and private loans), which is comparable to the national average. In addition, the state’s 100,000 or so borrowers pay an average of $ 295 per month to repay their debt.

Elizabeth Chordas also graduated from UD in 2021 with $ 45,000 in federal student loans. Neither parent could co-sign her loans, so she had to take them out in her own name each year. When setting up his repayment options, a payment of $ 438 would only result in $ 10,000 in additional interest. The more affordable option, just over $ 300, would accumulate an additional $ 30,000 in interest over time as it continued to make payments.

“I don’t understand why they think that anyone who just got their bachelor’s degree and doesn’t have a job yet will be able to handle this kind of financial situation,” Ms. Chordas said.

Financial lawyer and student debt expert Leslie H. Tayne of Tayne Law Group said the suspension of student loan payments saved borrowers $ 100 billion in interest charges. Additionally, 89% of students surveyed by the Student Debt Crisis Center said they felt unprepared to resume payments on February 1, resulting in the current extension until May 1.

“However, while this move should help some student loan holders, more than 20% of those polled said they would never be ready to start making payments again,” Ms. Tayne said in an email. “These survey results tell us that many borrowers will still have financial difficulties when payments officially resume in May.”

She added that canceling student loans would stimulate the economy and allow borrowers to pursue life goals currently on hold due to their debt.

“The extra money in their pockets could be used to start a family, buy a house, become an entrepreneur, invest, pay off other debts and buy consumer goods,” Ms. Tayne said. “Canceling $ 10,000 per borrower would free about 15 million people from their student loan debt. Plus, for borrowers who owe more than $ 10,000, the cancellation would lower their monthly payments, thus improving their cash flow. “

Ms. Chordas noted that a $ 10,000 loan forgiveness would make a huge difference to her.

“I will take anything, any type of forgiveness,” she said. “Our parents had full freedom with credit cards and loans, they had it all easy. Now they have collected everything for us and it is impossible to refund.

According to a 2019 College Board report, the average price of four-year tuition and public fees in the state was about three times higher in 2019-2020 than in 1989-90.

Ms. Chordas said she believed basic human rights like healthcare and housing should be available and free to the public, and education should be seen as one of those human rights.

“Make people understand that they need intelligence, knowledge, expanded worldviews, history, all of those things to grow as a person,” she said. “I think everything would be so much better if people had this free opportunity to grow up.”

Nora Carle graduated from UD 2019. She deferred her $ 25,000 loans six months after graduation because she couldn’t afford the payments and lucked out with the moratorium when the pandemic has struck.

“Working a seasonal job, I can’t even pay my bills half the time, like four months a year, so the extra student loans would make it incredibly difficult,” Ms. Carle said. “I am considering postponing them even longer, potentially since I am not in my field. No one warned me that the average salary (representing victims of domestic violence) was $ 12 an hour with no benefits, so even if I was full time in my field, I couldn’t afford it. in any event. “

She explained that most shelter workers are paid $ 10 an hour, while courthouse workers are paid around $ 15 an hour, with benefits only for full-time employees. Ms Carle added that she felt overworked in her previous job with unforgiving time off due to illness or emergency.

“If I could put a warning sign above this career field and others that don’t pay a living wage, I would,” she said.

Ms Carle said she felt there was a status quo imposed on young people today: go to college, find a job, get married, have children. She calls it a smokescreen on 21st century reality.

“This is the timeline that we’re supposed to follow, and God forbid, we don’t stick to that timeline, so we get stuck on that timeline,” she said. “My parents always said to me, ‘If you go to college, you’ll have a good job,’ because that was how it was when they were younger, but that’s just not the case anymore.”

Bridging America’s Gap, a workforce development organization founded in 2018 to address the skills gap dilemma, says the shortage in the skilled trades is growing more acute every day. The organization says skills gaps across the country are most prevalent in construction, manufacturing, mechanical, engineering, healthcare, restaurant and retail jobs.

A Harris Poll survey of 2,023 American adults found that 75% of those polled attributed a lack of skills to schools failing to provide adequate education for the 21st century. In addition, 93% also said high schools and colleges need to produce more employable graduates.

“College was pushed and pushed (my generation) by so many people, while trade schools weren’t,” Ms. Carle said. “Tradespeople are starting to retire, but there are fewer people available to fill these positions, and they are making a lot of money. But now all these college graduates cannot use them because there is no position in these fields.

Ultimately, the pressure of the status quo that Ms. Carle feels is not a one-off experience. Bridging America’s Gap says social pressure to attend college is one of the many things that have widened the gap since the turn of the century. Bridging America’s Gap notes the elimination of high school shopping classes once No Child Left Behind has been implemented, emphasizing college education and “ignoring experiences that could trigger a career in a trade. “.

The group also highlights the Great Recession, claiming that “countless entrepreneurs closed their doors and never returned, even when the economy rebounded. The trades have lost significant numbers of veteran workers and missed several years of training potential workers. “

The National Bureau of Economic Research also highlights the Great Recession, finding that the unemployment rate for recent college graduates climbed to 7% after the recession and remains above 5%.

“Adjusted for inflation, look at what we paid versus what our parents or grandparents paid,” Mr. Boyd said. “People ask why there is no money in the economy. No one can spend it because he is in so much debt because he goes to college, but also because he doesn’t have a lot of other viable options outside of college… It is very difficult to ‘get an 18-year-old entering college to understand the financial burden this will cause later in life once they are out.

Ms Tayne noted several options students have if they are still not ready to resume or start paying off debts in May. Borrowers can contact their service agent and request an income-based repayment plan, where their payments could be as low as $ 0 per month. If they work in the public sector, they should verify their eligibility for the civil service loan forgiveness program.

Ms Tayne added that the Biden administration recently passed a law to make it easier to obtain a pardon.

“As a last resort, borrowers can explore deferral and forbearance options to further defer payments,” she said. “However, with abstention, interest will accrue on their debt.”

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