While some employees can work from home during the coronavirus pandemic, medical workers must go into a hospital, nursing home, doctor’s office, or other medical facility to perform their jobs. They put their lives at risk to provide medical care to others, so it’s no surprise these frontline workers are being referred to as the “heroes of COVID-19.”
As a thank you for their service, New York Congresswoman Carolyn Maloney introduced a bill that would eliminate the student loan debt of frontline medical workers who are treating patients with coronavirus. Maloney explained that they deserve relief from the debt they took on to be trained for this type of work.
What does the bill entail?
Known as the Student Loan Forgiveness for Frontline Health Workers Act, the bill would forgive both the outstanding interest and principal on federal and private student loans owed by eligible frontline healthcare workers. The forgiven debt would not be considered taxable income, so these workers wouldn’t have to worry about a large tax bill.
According to the bill, a frontline healthcare worker is any individual who is “certified under federal or state law to provide health-care services and who provides COVID-related health-care services.” Doctors, nurses, medical residents, medical interns, medical fellows, home health care aides, and mental health professionals all meet this criteria and would qualify for loan forgiveness.
How much debt do healthcare workers have?
Since doctors undergo more training than other healthcare professionals, they tend to have the most student loan debt. The Association of American Medical Colleges found that a four-year medical degree in 2019 cost approximately $250,000 at public universities, and $330,180 at private universities. The average debt for a medical school graduate is $190,000.
Although the number isn’t as high for nurses, it’s still quite substantial. According to the American Association of Colleges of Nursing, graduate nursing students usually owe between $40,000 and $54,999. Even though doctors, nurses, and other frontline healthcare workers usually earn a good living, many of them are burdened with thousands of dollars in student loan payments each month.
But what about people who are struggling with student loan debt who aren’t medical workers? Could this type of relief open the door to broader student loan forgiveness for them as well? Let’s take a deeper look at this bill and what it actually provides.
Should general student loan debt forgiveness be extended?
Professionals in industries other than healthcare are also struggling with student loan debt. The average college graduate owes approximately $32,731. That’s a large chunk of change to repay, especially if they’ve been laid off, furloughed, or terminated as a result of the pandemic. So a good question to ask is “Should we extend student loan forgiveness as the country goes into a recession?”
Currently, The Coronavirus Aid, Relief, and Economic Security (CARES) Act has automatically suspended the principle and interest payments on federal student loans from the end of March 2020 all the way through September 30, 2020. The hope is that this six-month break from student loan payments can free up cash flow and allow individuals to cover their rent, mortgage, utilities, groceries, and other bills. But, once the forbearance period is up, the debt will need to be repaid.
Will there be any other assistance for student loan borrowers once the six months are up? Maybe. Under the HEROES Act, a $3 trillion stimulus spending proposal, there is a loan forgiveness aspect that would cancel $10,000 of student loan debt. This debt forgiveness would apply to all those who have private and federal student loans held by the Department of Education.
How to repay for student loans after forbearance
While loan forbearance can allow you to postpone your payments temporarily, it will not eliminate them. That’s why it’s a good idea to think about how you’ll repay your student loans when you’re required to do so again. Here are some tips on how to cover your student loan payments after forbearance.
- Cut your spending: Take a close look at your expenses and figure out where you can cut. After lockdown ends, you may be able to continue your quarantine habits of dining out less and walking around the neighborhood instead of going to the gym.
- Get a side hustle: If you’re short on cash flow, consider picking up a side hustle to help you with your student loans. You can always quit once they’re paid off.
- Refinance: You may want to refinance multiple student loans into a single private loan with a lower interest rate. If you opt for a shorter loan, you’ll be able to pay off your loans faster and save some money in interest in the process.
- Enroll in autopay: Find out if your loan servicer offers a discount to those who enroll in autopay. If they do, you may be able to save around 0.25% on your debt and easily avoid late payments.
With these strategies, you can become student loan debt-free faster and put your hard-earned money toward retirement, travel, home improvement, or any other financial goal you have.
Learn more about your debt relief options
If you’re struggling with student loan debt and need to get take action to improve your finances, it might be time to take action. Although we don’t handle most types of student loan debt relief, Freedom Debt Relief is here to help you understand all your options for dealing with your credit card and other types of unsecured debt. Our Certified Debt Consultants can help you find a solution that will put you on the path to a better financial future. Find out if you qualify right now.
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