As the COVID-19 pandemic has put financial pressure on universities, their students and borrowers, the government has provided billions of dollars in aid. However, at least one group of students is excluded.
Some federal student loans have been suspended for millions of borrowers and Congress has allocated billions of funds to universities to help them maintain their coffers and distribute emergency student aid, but many students remain in the red .
The pandemic is likely to put more students at risk of owing money to their remaining schools, said Rebecca Maurer, the organization’s advisor and director of programs.
“It only created a sensation,” Maurer said of the pandemic, particularly in the first few weeks when students may have left school unexpectedly when the country closed. “And what we do know is that unrest, especially for low-income people who attend community colleges, is likely to create institutional debt.”
Sometimes it’s an unpaid library or parking fee. In other cases, a university may hold a student responsible for federal funds, including grants, if they quit at the wrong time.
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Now an advocacy group is calling on lawmakers to include these elders in future pandemic aid.
“We underestimate the true magnitude of the student debt crisis in terms of the type and nature of debt and the sheer number of people involved,” said Seth Frotman, executive director of the Student Borrower Protection Center.
Frotman’s organization posted a small Monday
and urged lawmakers to keep these elders in mind when considering future aid programs.
“Unless we really understand how the biggest problem in student debt affects individuals and their families, we’ll never really solve it,” said Frotman, former student loans ombudsman at the Consumer Financial Protection Bureau.
While these debts are generally low, they can be damaging. In some cases, colleges use traditional collection tactics to collect funds and refer them to collection agencies.
In other scenarios, they will withhold the credentials of the students, which is a huge barrier for students who want to continue their education and get a degree to help them pay off the loan.
About 6.6 million high school and former students face an estimated $ 15 billion in institutional debt – money they owe their school. according to a report released last year by Ithaka S + R, a nonprofit organization focused on educational research.
“You can’t get your old credits and you have to start over,” said Catharine Bond Hill, CEO of Ithaka S + R and one of the authors of the organization’s report released last year. “Any investment you’ve made so far is basically wasted.”
One of the most insurmountable types of school debt that students face has to do with obscure federal financial aid regulations.
The rule known as Return to Title IV states that if a student receiving a government scholarship is absent before completing 60% of a semester, then some of the aid that comes from attending the school not technically “deserving” must be returned to the federal government. .
Often, schools simply return aid to the government on a student’s behalf, usually because the aid initially went directly to the school by the government.
The school is responsible to the student for these funds, even if they come from a Pell grant. The government is making this money available free of charge to low-income students who wish to attend university.
Congress wants to help elders
Despite these tactics, colleges and universities seldom recover most of the funds. For example, the University of California system estimated that it would lose between $ 10 million and $ 12 million in annual revenue, on a budget of $ 39 billion, if they were unable to collect the debt. , according to data cited by SBPC.
Now, the SBPC is calling on Congress to find ways to involve these elders in future relief efforts. They suggest that lawmakers require universities to reduce institutional debt for additional relief.
In addition, they are calling on the state and federal government to ban the retention of transcripts, a step some states have already taken.
Finally, they urge the federal government to insist that universities suspend collection of institutional debt for at least the same period as the student loan payment and freeze collections for relief.
Mark Huelsman, an SPBC employee, said that if the suspension of the student loan was taken on the assumption that borrowers would not have to repay their student loans to stay afloat in the current economy, “they would have this. debt and would continue to be paid. These debts are particularly inhumane and counterproductive. ”
“Federal and state lawmakers should closely monitor, settle and cancel these debts that weigh on students’ heads,” he said.
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