Interest on student loans, repayment deferred to May 1; OSU Center for Advancing Financial Education Can ‘Increase Financial Literacy’ – The Daily Barometer
Student loan interest and repayment has been suspended on federal loans since the start of the national state of emergency on March 13, 2020; the break has been extended until May 1.
Keith Raab, director of financial aid at Oregon State University, said federal student loan payments and interest accrual were halted early in the pandemic to support people who had lost their jobs and to ease the pressure on students and alumni.
According to a press release from President Joe Biden, the pause on federal student loan payments has been extended due to the ongoing pandemic. As more jobs are added and unemployment continues to fall, the press release says more time is needed for many to recover.
According to Free Application for Federal Student Aid website, only subsidized and non-subsidized loans taken out by students are affected by this freeze. This means that the Parent PLUS Loan – a loan taken out by parents on behalf of students – and private loans such as Sallie Mae are not subject to the same policy.
“About half of OSU students take out loans, and the average student debt when they graduate from OSU is about $27,000,” Raab said.
At present, the effect on current students due to this pause is minimal since payments do not begin until after graduation. Instead, this pause largely affects alumni who are currently repaying loans, although it also affects students who have taken out subsidized federal loans as they are not currently accruing interest.
This pause is also only in place for federal loans, which means that throughout the pandemic, former students are still required to repay interest and payments for private loans, such as those received from a Bank.
According to College Avenuestudents tend to take out private loans when their federal loans run out, meaning those most indebted may still be required to repay loans, which may also accrue interest.
“I will probably have between $20,000 and $30,000 in student loans; I intend to pay them back by getting a job as soon as possible and living frugally until they get paid,” said Max Kemling, a third-year mechanical engineering student at OSU.
Programs to help students get loan forgiveness include the Civil Service Loan Forgiveness Program, which exempts a student from their loans if they make payments for 10 years while working in the civil service . According to Raab, payments of $0 during the pandemic may even still count for relief programs like this.
“To be honest, I haven’t given much thought to how I’m going to repay my loans, except to work and reduce them bit by bit,” said Sarah Briggler, a third-year biology student. “Most working vets, due to the high amount of student debt they have, usually don’t finish paying off their loans until their 30s or even 40s.”
According to Raab, the OSU College of Business offers resources for repaying loans and recommends students go to Center for the Advancement of Financial Education.
“They have counselors and peer counselors to help students with budgeting, preparing for financial questions, and increasing their financial literacy,” Raab said.
Raab also recommends that students minimize the amount of loans they take out and try to graduate quickly. The people most affected by student loan debt, Raab says, are those who haven’t graduated and still have to repay the loans.
“I would just say student loans, if you have to take them out, are a way for you to pay for the education you need,” Raab said. “Take as few student loans as possible, try not to accumulate a lot of debt. Try to move through graduation at a steady pace. The closer to four years you stay in graduation, the less it can cost… Get to know your academic advisor, spend plenty of time with them, be sure to take what you need and to graduate as quickly as possible.