Stimulus helps some with student loans, but not all

Posted at 4:16 PM, Apr 08, 2020
and last updated 2020-04-08 17:16:44-04

The economic stimulus package passed by congress last week will put money in a lot of our hands, but it also aimed to give relief to those burdened by huge student loans.

But not all student loan borrowers qualify, and finding out if you do, could get tricky.

According to a California research group, currently Americans collectively owe $1.5 trillion in outstanding student loan debt — that’s more than the total credit card debt as well as total auto debt, according to the New York Federal Reserve.

Because 11.1 percent of total student debt is more than 90 days delinquent, it came as good news that the government included students loans in its recent stimulus package.

Jamal Wilson says he and other student had started to get a little nervous.

"It's crazy because I get stress from other students, like we don't have jobs we don't know what to do," explained the student loan borrower.

Now, many borrowers will get some breathing room.

"The CARES package had for federally owned student loans, it included a complete interest waiver for those borrowers through the end of September, and so that's a pretty big benefit," said Ben Litle, CEO of the non-profit Brazos Higher Education, which offers student loans.

”Not worrying about that interest you know, occurring for my own student loans? I love it,” said Wilson.

But wait, the stimulus only helps those with loans directly from the federal government.

”This has really created a lot of confusion in the way they implement the CARES package because borrowers don't know whether their loan qualifies for the waiver or not,” Litle explained.

He says borrowers should look at their statement for the phone number of their loan servicer and call them, to see if they qualify.

Even if they don't, some lenders like Brazos Higher Ed, do offer some relief.

"What we're doing as a non-profit, is we're offering a relief package, a no-questions asked 90 day forbearance, you don't have to make any payments but the interest still accrues." said Litle.

But you have to ask for it.

Why the difference?

Brazos borrows from the private bond market, and those bond holders still want to get paid.

And for the lucky few who can keep paying, Litle says it could work to your benefit.

”You know there are benefits to paying, because those payments would be going to reduce principal and so you could pay off your loan quicker,” said Litle.

Wilson says the uncertainty makes all students a little nervous, so he'd like government leaders to do more.

”I feel like it should be extended only for the fact that we don't know how long this is going to last and we don't know if people are going to be able to go back to work,” he said.

If we get to a next round of stimulus, Litle suggests lobbying members of congress to include some of the privately held loans so everybody can get a bit of relief.