College students in limbo as CARES Act and student loan repayment freeze are on hold

BIG RAPIDS – As applications are sent out and acceptance letters are mailed out, some parents and students might wonder about the state of financial aid at colleges.

Coronavirus, Aid, Relief and Economic Security Act and Higher Education Economic Relief Fund — federal COVID-19 financial aid programs — are most likely ending soon, said Melanie Mulder, associate director of financial aid at Ferris State University. .

“We are going to see a reduction (in financial aid),” she said. “I haven’t heard any recent discussion about continued funding past the Spring 2022 semester.”

However, the stock markets are still going strong. There has been a general increase in scholarship applications since the pandemic, and Mulder said Ferris has tried to facilitate applications.

That may be particularly important because the student loan repayment freeze is still set to end in August, Mulder said.

“We really have no idea what’s going to happen, what the rules will be and who might be impacted,” she said.

Some parents and students have changed their student loan strategies, said Brian Walsh, senior director of financial planning at SoFi. More and more borrowers are only asking for the bare minimum they need.

“What we don’t want to happen is someone graduating with hundreds of thousands of dollars in student loans on relatively modest incomes when they graduate,” he said. he declares. “From direct experience of working with people on that side of things, it’s very difficult to get a financial footing.”

But prospective students can run into hurdles with student loans. The Free Federal Student Aid Application determines students’ eligibility to receive federal financial aid, which may have a lower interest rate, and other grants. However, there will be a “gap after that to bridge and pay for education”, and that’s where private lending comes in.

“Often, students themselves won’t have the credit history, credit score, or income to be approved by themselves alone,” he said.

If a student cannot afford to repay the loan, then payments would fall to the co-signer, he said.

Walsh said prospective students should speak to a financial aid counselor for help, and parents should start conversations about loans early in the college application process.

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