Student loan repayment freeze extension provides reprieve for current students, grads
Following Tuesday’s extension of the federal student loan repayment freeze by the Biden administration, some university administrators are encouraged by the continuing assistance for graduates and current students.
As of Tuesday, the freeze will now extend through Aug. 31, four months out from the previous deadline of May 1.
Alyssa Dobson, director of financial aid and scholarships at Slippery Rock University, described the loan repayment freeze extension as “welcome,” especially for students who may have graduated or entered the workforce just before the pandemic.
She said 87% of students at Slippery Rock utilize loans of some sort, either private or public.
“(There were) students who had been four or five years removed and were just sort of in the swing of things and the pandemic hit and shook everything up,” Dobson said. “A few students who are about about five years out of graduation have been saying ‘oh my gosh, I am so glad this (freeze) has happened.’“
Dobson also said she feels for students who graduated during the pandemic itself, who may have been hit hard by multiple negative factors.
“Everything was a lot more difficult (for them), and inflation is so high, and repayment is just another struggle to pile on top,” she said. “I really thought it was a welcome reprieve to see that extension, and I think it is really going to help, obviously, those students who graduated during the pandemic, but really anyone who is paying student loans during the pandemic.”
Students who graduate this May also will benefit from the six-month grace period that applies to most federal student loans. Four months of the grace period overlap with the freeze, but the additional two will still count, Dobson explained.
During the freeze, students who already graduated and are still working on paying back student loans have some extra time to prepare, said Butler County Community College director of financial aid Julianne Louttit.
“If they already used their six-month grace period from prior years, they (would begin) repayment right away, so this gives them some breathing room to find a job,” Louttit said.
Selecting an income-driven repayment option can help lessen monthly costs for students, Dobson said.
“For a lot of people, there was a reduction of income during the pandemic, and if there was, you could submit new income information and potentially have a lower student loan payment,” Dobson said. “If they want an income-driven repayment, they should gather their most recent tax documents and have income certification done in time for repayment to start in September.”
At BC3, Louttit teaches an elective financial literacy class to help make money skills more understandable to students.
“This loan extension is a great example of the importance of financial literacy,” she said. “Students learn about accrued interest — the good, the bad and the ugly.”
In Louttit’s class, students discuss student loan debt, how to minimize student loans with educational cost strategies and how to build budgets based on projected incomes.
“I can’t express the importance of financial literacy and the impact of financial success and wellness (that comes with) a good understanding of it,” Louttit said.
On Thursday, Pennsylvania Governor Tom Wolf also outlined and reintroduced a potential new statewide scholarship opportunity called the Nellie Bly Scholarship Program, and proposed funding through the federal American Rescue Plan Act and the Race Horse Development Trust Fund.
The $200-million proposal would provide scholarships for students who attend either a community college or PA State System of Higher Education (PASSHE) institution. On Wednesday, State Rep. Jordan Harris introduced legislation to create the Nellie Bly Scholarship Program.
“When it comes to pursuing a higher education, skyrocketing costs over the last decade have put that dream out of reach for too many families. Pennsylvanians are being priced out of a brighter future,” Wolf said in a statement. “When our brightest and best Pennsylvanians can’t pursue a higher education because it’s unaffordable, that means we’re doing something wrong.”
The focus of the scholarship would highlight those pursuing programs with high workforce needs following the pandemic, such as health care, education and public service.
Students who take advantage of the program must stay in Pennsylvania to live and work for the same amount of time that they received the scholarship benefit.
