Repaying student loans especially stressful for these employees during pandemic
Some say it would have been impossible for them to have made their payments during the COVID-19 crisis without the CARES Act.
Repaying student loans has become a significant burden for many people during the COVID-19 crisis. It is especially stressful for public and nonprofit workers, according to a new report from TIAA. Three in four respondents associate negative feelings with their loans, including 41 percent who feel frustrated, 34 percent who feel hopeless, 26 percent who feel angry and 22 percent who feel ashamed.
Just 20 percent describe themselves as comfortable with their student loans.
More than two thirds (69 percent) of those with student loans have seen a reduction in household income as a result of COVID-19.
Of those with student loans, 23 percent have had a significant change in their work situation, including 8 percent who have become unemployed, 7 percent who have switched jobs, 6 percent who have been furloughed, 4 percent who are working multiple jobs and 4 percent who have gone from full- to part-time.
Fifteen percent have been forced to arrange for a deferment or forbearance, and 11 percent have been at least 60 days late on a payment.
The student debt forbearance from the CARES Act has provided a reprieve, with 80 percent of respondents taking advantage of it. Of those who benefited, 84 percent say it would have been somewhat difficult or impossible for them to have made their payments during the COVID-19 crisis without the CARES Act. This is particularly true among health-care workers, 68 percent of whom say it would have been very difficult or impossible to do without the CARES Act, compared to 53 percent of the total sample.
Respondents who did not attempt to enroll generally lacked the information they needed to go through the process. Forty-three percent didn’t know if they qualified for the program, and another two in five did not know where to go to get help with enrollment. Sixteen percent found the process too complicated, and 12 percent could not find time to complete the process.
When the CARES Act expires, however, a large majority of those with student loans expect the ongoing pandemic again to make their student loan payments difficult. Four in five of those who benefitted from the act expect to have somewhat or a great deal of difficulty keeping up with their payments.
Any form of debt forgiveness or loan reductions would be used by the majority of those with student loans to put toward savings or repayment of other debts.
Relief would enable broader financial wellness If they received loan forgiveness. Sixty-nine percent would save the money for a house, retirement or a child’s college education, and 61 percent would use that money to pay off other debt.
Those working in health care are more likely than others to use money from student loan debt forgiveness to take a vacation (37 percent vs. 27 percent for the total sample). If their loan payments were reduced by $150 a month, 84 percent would save the money for an emergency, a house, retirement or a child’s college education, while 52 percent would use the money to pay other debt.
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