During COVID-19 many people are concerned about their finances and this includes those in receipt of or who are seeking student loans. A new report from LendEDU finds that 68 percent of all U.S. student loan borrowers were unsure they could make their federal student loan payments before the Coronavirus Aid, Relief, and Economic Security (CARES) Act was implemented. This included 79 percent of those who have been laid off due to the pandemic and 83 percent of those who have been furloughed.
The CARES Act is a piece of U.S. legislation, representing a $2.2 trillion economic stimulus bill passed by the 116th U.S. Congress and signed into law by President Donald Trump in March 2020. The measure was introduced in response to the economic fallout of the SARS-CoV-2 pandemic.
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Additional data from the survey finds that 54 percent of those polled said they would not have been able to make their very next federal loan payment, including 61 percent of those who have lost their jobs, prior to the Act being passed. There also remains economic uncertainty going forwards, with 78 percent of private student loan borrowers stating that they are also not sure they can make payments on their private student loan debt, including 83 percent of those who have been laid off.
It also stands that 41 percent will continue to make federal loan payments during the grace period, while 43 percent will not. Examining this 43 percent of respondents further, among this group who are not making payments, 34 percent said they will spend the money on food and supplies; with 20 percent making mortgage or rent payments, plus 15 percent making payments to cover other bills (such as cable services, credit cards, and other financial obligations). The remaining 17 percent said that they will not have any extra money to spend despite not making federal loan payments. With this remaining proportion, this is indicative of how tight budgets have become for many, especially for federal student loan borrowers.
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Indicative of the economic hardship, 27 percent of respondents indicated they will consider refinancing their federal student loans during the grace period. This despite interest on federal loans being frozen at 0 percent until September 30, 2020.
