Page 12 - May 2022 Issue.indd

DOLLARS AND SENSE by Tolbert Rowe

Student Loan Payment Forbearance

On April 6, President Biden extended The purpose of allowing borrowers to $50,000 by not working) found their way
the student loan payment forbearance pause in making their payments was back to work.
program until August 31, 2022, meritorious and allegedly good for the Jobs were, and still are available in

eff ectively giving borrowers a 2 ½ year economy. First, it afforded those most nearly every profession. As vaccines

reprieve from monthly payments. When affected by the slow down and in some became more accepted and the
the COVID pandemic hit in March 2020 cases the shutdown of the economy, rate of infection dropped so has the
and the unemployment rate shot up breathing room by relieving them of number of unemployed workers. The
to 14.70% in April of 2020, everyone one payment they were responsible for unemployment rate in March of 2022
was concerned about what was going to making. Borrowers could focus what was 3.6% for those who have a bachelor’s
happen. We were in uncharted territory funds they did have in paying off other degree the rate was 2%.
and hundreds of thousands of people high interest loans or build up savings
suddenly were out of work. for an emergency fund or to buy a big- President Biden, citing a recent study by
ticket item like a vehicle or a house. the Federal Reserve Bank of New York,
In addition to eliminating the need said millions of borrowers could face
to make student loan payments for By April of 2021, the unemployment delinquency or default if payments were
everyone, whether employed or not rate fell by more than half to 6%, and to commence after May 1, as scheduled,

employed, Congress and President the Democrats, who now controlled the this according to an April 7 article in Th e
Trump approved the $900 billion wheels of government, fueled the fl ames Wall Street journal by Gabriel T Rubin
Covid Relief Bill. Along with enhanced of inflation by throwing another $1.9 and Andrew Restuccia. President Biden
unemployment benefits that added trillion into the economy. This boost of further stated the pause would allow

as much as $600 per week in Federal stimulus money increased infl ation from borrowers to prepare to resume making
unemployment benefits to state benefi ts an annual rate of 2.6% in February of their payments.

already being paid, the Relief Bill also 2021 to 5.2% in May of 2021. And from
provided checks of up to $1,200 per there inflation continued to accelerate Odd that 98% of those with bachelor’s

taxpayer to help Americans weather the past 6% in October 2021 to 7.5% in degrees are working, and 96.4% of
pandemic storm. January 2022. And President Biden is everyone else, need time to “prepare” to
blaming our current inflation bubble on make their payments?

Remember how some people were
making more in unemployment benefi ts Vladimir Putin? The study actually found just the
than they did working? Remember how All the money thrown at the COVID opposite, according to an OP/ED in the

difficult it was for some businesses to get pandemic has managed to get people same April 7 Wall Street Journal. “Th e

people to come back to work when there back to work. Even those who made study actually found that delinquency
was an easing of pandemic restrictions. more than they ever had with the rates for commercially owned federal
“Why go back to work to make less than enhanced unemployment benefi ts (some loans not covered by the pause fell early
I make not working” was the common unemployed were making more than in the pandemic and then returned to
response. pre-pandemic levels by the end of 2021.
That is not a catastrophe.”

“Your Mortgage Consultant Since 1985” My question for President Biden is, “do
you think unemployment, and overall
employment will be better in August
Purchase or Refinance than it is now, with unemployment at
3.6% and over 11 million jobs currently
unfilled? Will inflation over 8% make

it easier for borrowers to “prepare to
resume” their payments 4-5 months
from now? You don’t have to be a rocket
115 E Dover St. Ste 3 - Easton, MD scientist, or better a Harvard educated
tolbert@baycapitalmortgage.com C. Tolbert Rowe, economist to know the answer, No...
www.baycapitalmortgage.com NMLS Vice President/Lending There is no question to me and many

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others that this extension is politically
410-819-3005 / cell 410-310-3520 motivated to the extent that it will be
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