Winter is coming. No, not Jon Snow and the men on the wall. Winter, which for some, means graduation season. Currently, during the Covid pandemic, student loans payments have been suspended until December 31st. Without any further action from Congress or additional executive orders, student loan accounts will start demanding payments and accruing interest again. For the students graduating in a few weeks, the clock starts ticking almost immediately. For those who were making payments and got temporarily relief, that relief is almost gone.
In the best of times, the countdown until when payments begins seems pretty standard. You have 6 months from the date of graduation to begin making payments on your student loans. Lucky individuals will already have jobs lined up or plans to hang up their own signs and open up shop. Others take the opportunity to ponder grad school or hunt for work. In the middle of a worsening pandemic, the challenges of repaying student loans soar. It’s a bit like expecting to climb Mt. Everest but finding yourself being tasked to build a spaceship instead, in your parent’s basement, to fly to Mars, while using everything you learned getting that BA in English Lit.
Between February and May, during the first big wave of Covid cases, the economy lost over 23 million jobs. Nearly 31 million Americans found themselves on unemployment benefits, unable to find work or get to work safely. Congress acted quickly to pass a stimulus package and provide loans to businesses and relief to many Americans. Despite the best of intentions, more than 3.3 million businesses were forced to lay off staff and close their doors for good. In a 3 month span, 5 times as many businesses filed for bankruptcy and permanently closed their doors than during the entirety of the Great Depression. Small businesses bore the brunt of it shedding over 11 million jobs.
To make matters worse, many of the benefits expired at the end of July without additional support from Congress. Graduates in December find themselves facing a scarce job market and fierce competition for the few positions available. At the height of government support in May and June, about 7 million of those jobs came back temporarily, but have once again started to fade away after the relief package expired. Many small businesses found themselves on the outside looking in while trying to apply for the Paycheck Protection Program and SBA loans. The funds were there to help, but meant nothing to these small businesses who were unable to tap into the funds to help pay their operating bills and payrolls. The chief complaint was processing time, priority being given to big business partnerships with banks and high volumes of red tape to navigate with shifting answers depending on who was on the other end of the phone.
While those problems may seem like a lifetime ago, or we feel like we’ve aged a few decades over the past 8 months, the devastating effects of a crumbling job market still loom dangerously overhead. Despite US jobs reports stating the economy is once again slowly adding back 600 to 700 thousand jobs a month, over 1,000,000 new unemployment claims are being filed each week. For those who have been able to maintain their jobs during the pandemic, many are facing dangerous work conditions, severe cuts to working hours, or massive pay cuts and forced furloughs. When added to press releases from the airline, hospitality, retail and food industries instituting mandatory furloughs and mass layoffs, the picture becomes increasingly more grim.
Before Covid, the total amount of student loan debt was already a towering 1.7 TRILLION dollars. That is almost the market cap for Apple. Without the re-authorization of a student loans deferral program, during what may eventually be the worst pandemic ever, the 1.7 trillion dollar figure is expected to rocket up as more and more students find themselves unable to repay their loans and are forced to eventually stop paying and fall into default. To make matters worse, the protections for borrowers by congress through the CARES act and in the follow up presidential executive order only extended to borrowers on federal student loans. 1 in 10 student’s loans are private. At the moment, 12% of all student loans are in default. The Department of Education projects that number to climb as high as 40% without additional action to support and protect students during this pandemic.
It’s hard enough spending your last year of college stuck behind a computer screen and away from campus but now, students are left holding the bag and forced to pick up the pieces of shattered expectations. How are these new graduates going to be expected to pay off their $40,000-$50,000 in student loans? Any hope of relief on a federal level is currently tied up behind partisan fighting and other priorities.
There is hope though. Covid has brought so much pain and anguish to everyone. No one, young or old, rich or poor, black or white has been able to escape the effect of Covid. But, no matter what it does, it can’t stop the outpouring of compassion and kindness that has truly blossomed in its wake. People are donating their time and money to help where they can. Blogs and video tutorials are popping up all over social media to share ideas on how to save money, teach new skills and offer masks, cleaning products and other hacks to help out one another. People are finding more creative ways to make ends meet, save money on their normal purchases and make what they have go further. It’s not a solution but a bridge to get us one step closer.
A new day is coming. With each new day, comes new promise and opportunities to bring new solutions to what affects us the most.