Private Student Loans: COVID-19 Throws Off Budgets for Parents of College-Faring Kids
Student loan debt was already an enormous issue before COVID-19 began to infect people around the world; however, the financial repercussions were devastating too. The student loan debt crisis began to escalate after the 2008 recession, with tuition increasing by 25 percent and student loan debt overall increasing by 107 percent. The numbers have continued to climb—and national concern grows as over 45 million borrowers now owe a cumulative $1.64 trillion.
Even with a genuine crisis in the midst, however, lenders keep granting loans (often sizable ones) which students may have serious difficulty paying back. This is especially true of private student loans and those granted for graduate school, usually accompanied by a hefty price tag. COVID-19 has brought many new complications to the financial scene, but ironically many federal borrowers have also been met with a respite they never expected in terms of deferments through the end of the year.
While the CARES Act has eased the panic for some federal borrowers, many others were left out in the cold depending on their programs. Private student loan borrowers are at the mercy of their servicers, some of whom may offer similar programs. Now, as college-age kids continue to enroll and go back to school, many parents have been met with new financial stressors.
Tens of millions have been forced to face unemployment—and with that, household budgets have been strained to the limit. A new study shows that due to financial pressures caused by the pandemic, 39 percent of parents who previously would not have been relying on federal aid have changed their plans.
“Our survey found that 48% of parents lost income as a result of the pandemic, and 44% said they can’t afford to pay for as much of their child’s education as they had originally planned,” said Manny Chagas, vice president of Discover Student Loans. “Those are significant changes at a time when families are thinking about college and exploring funding options. It underscores the importance of filling out the FAFSA each year.”
The data also showed that 53 percent of parents do not think their kids are getting enough in financial aid, with 26 percent planning to appeal the minimal amount of aid they are getting.
Have you experienced problems with your loan service provider or student loan program, or are you in danger of defaulting on your student loan? Contact Fitzgerald & Campbell, APLC now so one of our experienced student loan debt attorneys can review your case and discuss all the available options with you. Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations, to include student loan issues, bankruptcy, and other debt management processes. We are here to help! Click here to schedule a free 30-minute consultation, call us at (855) 709-5788, or email us at email@example.com.
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