What The New Cares Act Means For Student Loan Debt & How To Take Advantage Of It Best

In Education

The House of Representatives recently passed the CARES Act, which Donald Trump signed into law, which provides quick and much-needed reprieve due to the economic slump’s effects due to the pandemic. This includes effects on small businesses, airlines, unemployment benefits, and federal student loans.

The regulations were given the greenlight in March and stretched to September. Trump has effectively further extended them to the last day of December 2020.

For student loans, this implies a much-needed break in repayment of the loans to the end of the year. It also stipulates President Trump’s notion to waive interest that would otherwise accrue during this period. This vital inclusion ensures that the repayment does not soar due to the rising interest due to non-payment. The caveat is that it only applies to federally held student loans and not private-held student loans, among other details.

In relation to a study done three years back on the Federal Reserve, the student loan’s average median monthly repayment is $ 222. This could mean that savings worth $ 2,220 could be realized. There is simply no overstating how momentous these extra funds could prove to be, especially in economically-stringent times.

While the pandemic has ripped up many economic strongholds all across the country and world, it is quite clear from the research that those who have a college degree have fared better than those without when it comes to job losses. A survey done on more than 15,000 people in the UK and the US proved that those with a college degree were eight percent less likely to lose their job than those without the same college qualification. Those who graduate college are also less likely to be affected by the loss of income.

With this in hindsight and the relief policy recently extended by the President, it, therefore, could prove a great deal to continue making payments towards the loan repayment for those who can afford to do so. This means taking advantage of the voided interest rate and hiatus. All this could result in wiping out huge chunks of the loan. The money would be going directly towards the loan balance and not the interest.

With loans going into tens of thousands of dollars, this period could prove propitious to many. So, for all who still have some form of economic activity rolling on, this could be the season which could be pivotal in wiping out huge chunks of that dreaded loan.

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