7 ways borrowers can benefit from student loans

| |

Congress has just passed the most expensive measure in American history in response to the coronavirus (COVID-19).

The $ 2.2 trillion stimulus package is designed to help the US economy cope with the pandemic as states close and unemployment claims increase.

For more than 44 million borrowers with $ 1.5 trillion in student debt outstanding, Congress offers relief in addition to what the White House and Education Department have already announced.

Experts were not impressed. Here are the details:

A woman wears a face mask as students prepare for spring break and an extended period of online coronavirus courses at Syracuse University, New York, March 12, 2020. The photo was taken on March 12, 2020. (Photo: REUTERS / Maranie Staab)

A woman wears a face mask as students prepare for spring break and an extended period of online coronavirus courses at Syracuse University, New York, March 12, 2020. The photo was taken on March 12, 2020. (Photo: REUTERS / Maranie Staab)

<h2 class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The good news“data-reactid =” 40 “>The good news

1) Borrowers with federal student debt do not have to pay until September 30 (six months) because they are suspended. This includes loans to parents.

2) Interest will also be suspended until September 30, 2020.

3) If you participate in a forgiveness program like PSLF, your suspended payments will continue to count for those months.

4) Credit bureaus regard suspended payments as regularly rescheduled payments.

5) If a borrower is in arrears with his student loans, collection is suspended (his wages are not garnished, the tax refund is not reduced, etc.).

The government is also returning $ 1.8 billion in reimbursements to some 830,000 borrowers who have withdrawn their loans and have raised debts since the national emergency was declared.

6) If your employer pays your student loan payments, you can do so until January 1, 2021 tax-free for up to $ 5,250 per year.

“I think this is a start in the right direction, but far from enough,” Experience Your Wealth’s Jake Northrup told Yahoo Finance. “Given the continuing rise in education costs and the fact that more and more employers need a higher degree, I believe that this income exclusion needs to be permanent so that more employers can help their employees repay their student loan balances.”

7) From March 13, all federal student loans have an interest rate of 0% for at least 60 days. Therefore, a lenient indulgence is an option for a period of 60 days if you ask your servicer.

(Graphic: David Foster)(Graphic: David Foster)

(Graphic: David Foster)

<h2 class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "“Today’s aid package shows how little we have learned”“data-reactid =” 70 “>“Today’s aid package shows how little we have learned”

At the same time, consumer advocates were not satisfied with the package.

“The failure of lawmakers to respond to the latest financial crisis led directly to our current student debt crisis,” said Seth Frotman, a former student loan ombudsman at the Consumer Financial Protection Bureau. “Today’s aid package shows how little we have learned in the past ten years. If the Trump administration and Congress fail to take any significant, comprehensive additional steps on behalf of tens of millions of American families with student loans, the next wave of the student debt crisis will be even more devastating. “

Student Borrower Protection Center executive director Seth Frotman and National Consumer Law Center attorney Persis Yu say during a House Financial Services Committee hearing on student debt and student loan service providers on Capitol Hill in Washington, USA, on September 10, 2019 out. REUTERS / Jonathan ErnstStudent Borrower Protection Center executive director Seth Frotman and National Consumer Law Center attorney Persis Yu say during a House Financial Services Committee hearing on student debt and student loan service providers on Capitol Hill in Washington, USA, on September 10, 2019 out. REUTERS / Jonathan Ernst

Student Borrower Protection Center executive director Seth Frotman and National Consumer Law Center attorney Persis Yu say during a House Financial Services Committee hearing on student debt and student loan service providers on Capitol Hill in Washington, USA, on September 10, 2019 out. (Photo: REUTERS / Jonathan Ernst)

Two of the frustrations that consumer attorneys are causing with the current package are two:

1) Only borrowers with direct federal loans are eligible. Borrowers with nationwide guaranteed loans from private companies and / or private student loans do not.

Two consumer advocates, Americans for Financial Reform and the Student Borrower Protection Center, wrote letters to banks and refinancing companies to give borrowers the same benefits that federal borrowers have.

“Private student loans are a key segment of the consumer credit market, are close to personal consumer loan levels, and exceed both payday loans and outstanding past due medical debt,” Seth Frotman and Alexis Goldstein of each organization wrote to Citizens Financial Group Chairman and CEO Bruce Van Saun. “If immediate action is not taken, the effects of the coronavirus pandemic could significantly jeopardize the financial lives of the millions of borrowers who rely on private student loans to make the American dream come true. It doesn’t have to happen. “

2) The package also does not include student debt relief. Democrats have suggested deleveraging between $ 10,000 and $ 30,000 to help borrowers weather the pandemic and economic crisis.

Experts are also concerned about what will happen when the economy and employment return to normal.

Previous cases in which borrowers affected by a disaster were forgiving had difficulty getting back on track because servicers were unable to guide them to affordable repayment options after the period expired, the company said Team of Frotman firmly.

– –

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Aarthi is a reporter for Yahoo Finance. She can be reached at [email protected] Follow her on Twitter @ aarthiswami. “data-reactid =” 107 “>Aarthi is a reporter for Yahoo Finance. She can be reached at aa[email protected] Follow her on Twitter @ aarthiswami.

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Continue reading: “data-reactid =” 108 “>Continue reading:

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Read the latest financial and business news from Yahoo Finance“data-reactid =” 113 “>Read the latest financial and business news from Yahoo Finance

<p class = "Artboard-Atom Artboard-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, Youtube, and reddit.“data-reactid =” 114 “>Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, Youtube, and reddit.

Previous

High school graduate is holding a prom for her family at home after the school canceled the dance due to the corona virus

Trump says the U.S. won’t pay for Meghan and Harry’s security

Next

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.