The Effects of COVID-19 on Student Loans

Even before the 2020 COVID-19 pandemic shut down the economy, the nation’s college graduates were largely unable to finance their debt repayments. Now, experts warn that the student loan crisis will deepen.

If you have loans and your ability to pay is compromised, consider enlisting the services of student loan financial consultants at AGSN.

Current estimates indicate that Americans collectively owe in excess of $1.6 trillion for their higher educations – a huge chunk of the entire US GDP.

This sort of debt burden – especially considering that college students graduate into a dismal job market – is unsustainable in the long term. The crushing weight of the student loan debt crisis reverberates throughout the economy, affecting homeownership, consumer spending, asset accumulation, and generational wealth.

Prior to the pandemic, student loan debt had already surpassed credit card debt as the #1 drag on the middle class’s economic prospects. Now the forecast is even more dire.

The CARES Act, the behemoth legislation intended to cover all aspects of the economy to prevent a collapse, was passed by Congress earlier this year. It grants a reprieve on student loan payments so that loanees are temporarily granted amnesty on their debts until September. Once September rolls around, it’s anyone’s guess what debt-related provisions might follow.

The general reason for the ballooning student loan debt is a toxic combination of climbing college costs and a weak economy. What jobs there are available generally fit the low-skill, low-pay mold of retail work and manual labor. The demand for skilled labor (i.e. college graduates) has diminished and will likely continue to diminish following the economic shutdown.

The U.S. federal government response to the pandemic has been spotty and patchwork, inciting widespread criticism both at home and abroad for the malpractice. It remains unclear what long-term vision, if any, political leaders have for managing the student loan crisis that is virtually guaranteed to get substantially worse in the coming years.

AGSN is always ready to help you manage your debt effectively.