WASHINGTON — Many college graduates in 2020 will likely face bleak job prospects as the coronavirus pandemic drives the economy in recession.
Combine that predicament with high rates of student loan debt — which many have to start paying as soon as they graduate, regardless of whether they have an income to pay the debt — and new grads are potentially in for a world of financial hurt.
Some members of Congress want to make those students a priority. California Rep. Josh Harder, a Democrat, and Rep. Brian Fitzpatrick, R-Pa., are introducing a bill this week to allow college students graduating in 2020 who took out federal student loans to defer payments on their debt for at least three years.
Depending on the length of the coronavirus pandemic, the Secretary of Education could extend eligibility to graduates in 2021 and 2022.
“I graduated in the middle of the Great Recession, and I saw tons of my friends struggle to find a job – college grads this year are stepping into the same climate and they need a hand,” Harder said. “We’ve got to make long-term fixes to our student loan program, but this is a straightforward, bipartisan proposal that can bring recent grads relief right now.”
The bill does not apply to private student loans, only federal ones, but would apply to graduate student loans as well as undergraduate. Sen. Mitt Romney, R-Utah, is introducing similar legislation in the Senate.
Harder is hopeful student loan deferment would be passed as part of one of the upcoming major aid packages for coronavirus. House Speaker Nancy Pelosi, D-Calif., has indicated she would like to pass another economic relief bill by the end of April. But specifics for what that bill would include are still in the early stages of negotiation.
“Additional student relief measures are still under consideration for inclusion in the next package,” Drew Hammill, Pelosi’s deputy chief of staff, told McClatchy Wednesday.
People held about $1.64 trillion in student loan debt in the U.S. at the end of 2019, according to the Federal Reserve. Among the class of 2019, about 69% of college students took out student loans and the average debt was about $30,000, according to Student Loan Hero, a company that helps educate students on their loans.
Meanwhile, it’s difficult to pinpoint exactly how the unemployment rate has increased over the past few weeks. While the Bureau of Labor Statistics reports that unemployment rose only about 1% over the month of March, to 4.4 percent, that doesn’t reflect the weeks of March when the coronavirus pandemic hit the economy hardest.
A New York Times estimate puts the current unemployment rate closer to 13% and rising, given the Labor Department reported that 10 million people had filed for unemployment in the two weeks prior to March 28 and the likelihood that an additional 4 million people had lost their jobs since then.
The unemployment rate peaked at 10% in the Great Recession, in October 2009, according to the Bureau of Labor Statistics. The highest rate of unemployment in U.S. recorded history was 24.9% in 1933, during the Great Depression.
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