Washington When Connor Mullen learned that the federal government had instituted a new program that temporarily reduced his student loan debt of $ 185,000, he reached out for that help immediately.
A native of South Windsor, he earned a bachelor’s degree from the University of Connecticut and attended law school at Boston University School of Law. He describes himself as “one of the lucky ones” as the pandemic has sparked a wave of unemployment, especially among the youngest graduates.
“I’m lucky to still have my job,” said Mullen, 29. He works as an officer for the Vermont judicial system and makes about $ 51,000 a year.
With luck or not, he snapped the limited help Congress provided. “I used it the day I heard about it,” he said.
The Coronavirus Aid, Relief and Economic Security Act, or CARES Act, passed by Congress in March provides for a suspension of principal and interest payments until September 30 for government-sponsored student loans such as Mullen’s.
There is growing awareness in Congress that more needs to be done to reform the way the United States funds higher education, and plans to facilitate borrowers are picking up speed. But there is no consensus on what to do
The HEROES Act, the latest stimulus package under consideration by Congress, proposes extending the deferral of student loan payments for another year. However, the proposal is part of a House bill that is unlikely to be considered in the Senate.
And, unlike the CARES Act, that postponement would apply to both private loans and government student loans like Mullen.
The HEROES Act would also waive up to $ 10,000 in student debt for those who borrowed money from all types of lenders.
That relief was scaled back shortly before the vote on the bill earlier this month. Initially, all Americans with student debts would be entitled to up to $ 10,000. This has been changed to restrict eligibility for the forgiveness program to those who are on December 12th.
The draft law defined those who are “economically in need” as people who at that time were or were in default with their student loan; were in financial distress, had their student loan deferred, or had an income-based repayment plan.
While the coast-to-coast student loan issue resonates, it has a particular impact in Connecticut. According to LendEDU, a consumer finance website, Connecticut college graduates had the highest student loan debt in the nation last year, averaging $ 38,776.
Mark Kantrowitz, university expert and editor of Savingforcollege.comHe said student loan forgiveness, as envisaged by the HEROES Act, “will be controversial because Republicans dislike forgiveness of any kind”.
But the GOP could come, especially as election day approaches.
“Everything depends on the pressure of the voters,” said Kantrowitz. “Republicans will worry more and more as the elections get closer, and handing out money is a great way to buy votes.”
A drop in interest rates and enrollment
Mullen has an income-based repayment plan that requires him to pay less than $ 400 a month. If he wasn’t on the special plan, Mullen said the interest and principal payments on his loans would typically cost him about $ 2,500 a month. But the smaller monthly payment that Mullen negotiated doesn’t pay back the principal on his loans and only pays a fraction of the 6% interest on his debt.
“I don’t think I’ll ever be able to pay them back,” says Mullen of his loans.
He said the $ 185,000 he owed for his education, most of it for law school, was always in the back of his mind. He believes his students’ debt will be an obstacle to buying a home or sending his kids to college.
Mullen said the only way to get out of debt is to become a successful lawyer at some point and make enough money to break free of student loans.
“Hopefully these loans will pay off later,” he said.
Due to the rising cost of college education and the particularly high tuition fees for graduate schools, the student loan market has grown more than 70% to $ 130 billion in the past 10 years and has recently outpaced the growth of auto loans and credit cards Mortgages.
One bright spot of the pandemic, however, is that the new federal student loan rates, which currently charge between 4% and 6% interest, will drop to a historically low rate of around 2.5% for undergraduate students.
But fewer students could take advantage of these low rates this fall.
Kantrowitz predicts college enrollments will drop 10 to 20% this fall as U.S. closed borders policies and other factors reduce the number of international students, and some American students decide it’s still too dangerous to go on Go to college. The prospect of paying tuition fees to take online courses is also a daunting prospect, Kantrowitz said.
“Who wants to pay tens of thousands of dollars to watch videos all day?” He asked.
Quinnipiac University announced this week that it will welcome students back to campus, with new strict social distancing guidelines and classes that will be a mix of online and face-to-face learning.
Sacred Heart University and the University of Bridgeport also plan to hold face-to-face classes. Meanwhile, the University of Connecticut, Yale, the University of New Haven, and other schools in the state are awaiting their decision.