In March of 2020, many undergrads dropped out of university due to a questionable return on investment for an education. At the same time, many households faced a greater threat: unemployment. During the first week of the pandemic, over a million people and roughly a third of households had someone lose a job and/or were forced to take a pay cut via the U.S. Bureau of Labor Statistics. With many companies going out of business and job security being at an all time low, both students and alumni questioned how to pay back their loans, which ranged from tens to hundreds of thousands of dollars. In response to this, the Federal Government decided to freeze any payments for student debt on Friday, March 13 of 2020 until the economy is at a stable place for lenders to attempt monthly payments.
Fast forward to February 2022 and student loan borrowers were still forgiven from student loans from three extensions of payments by the Biden Administration. As of now, students, both former and enrolled, will not have to pay back any loans until after the first of May. President Biden explains the reasoning behind the extension in a White House briefing via whitehouse.gov: “Now, while our jobs recovery is one of the strongest ever — with nearly six million jobs added this year, the fewest Americans filing for unemployment in more than 50 years, and overall unemployment at 4.2 percent — we know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments. This is an issue Vice President Harris has been closely focused on, and one we both care deeply about.”
As the job market continues to expand, the Biden Administration is essentially allowing many borrowers a time frame to start working again and create a plan in preparation for after May 1, when student loan payments begin to resume. With this being said, two major negatives may occur for many including the following: occurring missed payments and transition will become difficult for many. A recurring theme before the start of the pandemic was the fact that many borrowers were unable to make payments on a consistent basis. Abigail Johnson Hess from CNBC states that “. . . wages have just begun to increase after several years of sluggish growth, and student debt holders are being pinched. The result: more than 30 percent of student loan borrowers are in default, late, or have stopped making payments after just six years.”
With over a quarter of student loan borrowers unable to pay off debts on time before the pandemic, who is to say that this will not continue under further economic struggles? Kevin Carey from Vox calls the negative effects “like Dante’s Inferno,” a journey to Hell. The journalist explains the loan system: “If you miss a payment, you descend into a kind of limbo called “delinquency,” where you can stay for up to nine months. If you continue to miss payments, you fall down another level into hell: default, where your wages, tax refunds, and even Social Security checks can be garnished.”
Living in a society where you make no income off wages, get no government benefits, and still owe thousands of dollars to the ones who helped you receive a college degree is a reality many live in and a scenario that may occur to new student loan borrowers.
The truth is that there are many factors that can contribute to the downfall of repaying student loans. However, many well-known establishments have debt free programs, reimbursing students who put portions of their salary towards tuition. Some of these job openings with student benefits include Chipotle, In and Out, and McDonalds. Check locally to see what resources are available for you.
Featured Image: Sage Amdahl / Quaker Campus