A new bipartisan bill aims to help fresh graduates deal with their student loans by deferring them for up to three years.
The COVID-19 Graduate Relief Act is sponsored by Representatives Josh Harder (D-CA) and Brian Fitzpatrick (R-PA), among others. The legislation would allow any student who graduates during the 2020 calendar year to defer their student loan repayments — without interest — for up to three years.
“In these uncertain times, jobs are down and students are learning through video conferences. Graduating from college, looking for a job, and paying off student loans are stressful enough, and we need to do what we can to help students succeed,” Rep. Brian Fitzpatrick (R-PA) stated in a statement announcing the bill. “By allowing this year’s graduates to defer their student loans payments for up to three years, our bipartisan legislation will allow them to enter the job market and give them one less thing to worry about.”
If the deferment bill is passed, fresh graduates holding federal student loans — not private — can at least postpone their student loan repayment during the pandemic but “not to exceed three years, following the date of the enactment” of the legislation, according to text of the bill reviewed by Yahoo Finance.
Student loan borrowers would qualify for the deferment if they graduate between Jan 1 and Dec 31, 2020, from the institution they borrowed the loan.
Graduating students ‘need a hand’
An estimated 1.975 million bachelor’s degrees are expected be awarded during the 2019-20 academic year, according to the National Center for Education Statistics.
Most of the graduates enter the workforce with student loans. Among last year’s graduates, 69% had taken out student loans, according to Student Loan Hero. The average debt held was around $29,900 (both private and federal). Consequently, graduates are worried about entering a job market under the current environment.
And opportunities are dwindling: As of March 27, over 80% of employers have cancelled in-person recruitment activities, according to Handshake, a job-search platform for college students. Some of have shifted online, hosting virtual panels, office tours and so on.
And out of 192 employers on the platform, at least 10% have either cancelled their internship programs. Furthermore, out of 1,002 student respondents, 30% of all juniors and seniors who secured an internship have had it rescinded.
“I graduated in the middle of the Great Recession, and I saw tons of my friends struggle to find a job – college grads this year are stepping into the same climate and they need a hand,” Rep. Harder said. “We’ve got to make long-term fixes to our student loan program, but this is a straightforward, bipartisan proposal that can bring recent grads relief right now.”
Senator Mitt Romney (R-UT) has also called for similar action in mid-March.
Aarthi is a writer for Yahoo Finance covering consumer finance. She can be reached at firstname.lastname@example.org. Follow her on Twitter @aarthiswami.