How would you like to delay your student loan payments for three years?
Here’s what you need to know.
Delayed student loan payments senators Mitt Romney (R-UT) has proposed new legislation to postpone payments to federal students for new undergraduate graduates for up to three years. The COVID-19 Graduate Relief Act will apply to anyone graduating from a university from Jan. 1, 2020 to Dec 31, 2020. Interestingly, the proposed law will empower the Minister of Education (currently the Betsy DeVos)-not the parliament-to renew the eligibility for anyone graduating in 2021 or 2022 if the minister determines that the negative economic impact of COVID-19 guarantees such renewal. Romney’s proposed bill will amend the Undergraduate Education Act in 1965.
University graduation graduates this year suddenly faced the substantial barrier of joining the workforce, said Rom Romney. As… We must lessen the burden on students by letting them delay their payments until the economy retook the normal.
How it will workThe proposed law will work like this:
For example, you graduated from university on May 5, 2020.Typically, you will automatically receive a six-month grace period for any federal student loan payment. In this example, you will not owe any payments to federal students until Nov. 2020.In Nov. 2020, you will start a monthly federal student loan payment.Under the COVID-19 post-Graduate Relief Act, you will not owe any payment to federal students until May 5, 2023.On May 5, 2023, you will be making your first monthly federal student loan payment.
While the federal government will lose interest income in three years, you (the borrower) will save three years, or 36 months, the original payment value and interest. Instead, you can use those savings for the cost of living, investing or repayments for example. This proposal will not apply to private student loans, also not in favor of those who borrow loans for graduates.
Legal House: Delayed student loan payment Representatives Josh Harder (D-CA) and Brian Fitzpatrick (R-PA) have made two partisan companion laws in the House of Representatives, with six co-sponsors. In these uncertain times, work is reduced and students are learning through video conferencing. Graduating from college, looking for a job, and paying off student loans is sufficiently stressful, and we need to do what is possible to help students succeed, says Fitzpatrick. By allowing this year’s graduates to delay their student loan payments for up to three years, our bipartisan law will allow them to participate in the job market and help them less anxious.
If this proposal becomes a law and those who borrow money for students can delay the federal student loan payment for three years, that would be a transformation change. Typical student loans last 12 months, although it can be renewed. New graduates have received a six-month grace period for their federal student loans. This new proposal will delay automatic payments for three years. Early this year, President Donald Trump first postponed the federal student loan payment for 60 days through the executive order. Thereafter, Congress expanded its ability to suspend federal student loan payments for six months – through the CARES-until 30 Sep 2020. In both cases, the interest rate is 0% for your federal student loan. This new proposal, which, if adopted, delays student loan payments of more than five times longer than the CARES act.