A TIAA survey shows that 80 percent of borrowers who work for non-profit organizations or government agencies will struggle to repay their student loans when the payment pause and interest waiver ends on December 31, 2020.
This is particularly true of healthcare workers, many of whom have experienced pay cuts even as they work on the front lines of the pandemic.
Many student loan borrowers with public service jobs have been affected by the coronavirus pandemic. More than two-thirds have experienced a decrease in household income and almost a quarter have experienced job loss, furloughs, a reduction in work hours or have been forced to switch jobs.
These borrowers also tend to have above-average student loan debt, with 58 percent reporting student loan debt in excess of $50,000.
Student Loans Are Stressful
More than 60 percent say that their student loans are a significant source of stress. More than 40 percent feel frustrated, a third feel hopeless, more than a quarter feel angry and more than a fifth feel ashamed. Only a fifth say that they feel comfortable with their student loans.
The payment pause and interest waiver helps reduce stress levels by improving the borrower’s cash flow. About two-thirds of the survey respondents say that they would use the savings from lower loan payments and loan forgiveness to build an emergency fund, pay down other types of debt or save for a home, retirement or their children’s college education.
May Be Eligible for Public Service Loan Forgiveness
Borrowers with federal student loans may be eligible for Public Service Loan Forgiveness (PSLF). To qualify, the borrower’s federal student loans must be in the Direct Loan program and they must make 120 qualifying payments while working full-time in a qualifying public service job. The remaining debt will be forgiven, tax-free.
The payment pause and interest waiver counts toward the 120-payment requirement if the borrower remains employed full-time in a qualifying public service job.
Challenges Qualifying for Public Service Loan Forgiveness
Most of the survey respondents are familiar with Public Service Loan Forgiveness, but only 71 percent are participating in the loan forgiveness program. Of respondents who did not attempt to enroll in Public Service Loan Forgiveness, 43 percent didn’t know if they qualified, 39 percent did not know where to get help with the program and 16 percent said that it was too complicated.
Shelly Ann Eweka, director of financial planning at TIAA, said, “There has never been a more important time to help non-profit workers lower their monthly student loan payments and work toward student loan forgiveness.”
TIAA works with Savi Solutions to provide a tool to help borrowers who work for non-profits reduce their student loan payments and qualify for public service loan forgiveness.
About the Survey
TIAA’s 2020 Nonprofit Student Debt Survey polled 600 student loan borrowers age 21-64 with a Bachelor’s degree who were employed by a non-profit organization or government agency on January 1, 2020. The survey was conducted from September 22, 2020 to September 30, 2020.
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