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Ins-and-Outs of the CARES Act and Loan Deferrals

CARES Act generic image

June 8, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a relief package signed into law on March 27, provides more than $2 trillion in economic relief for workers, families and small businesses in the United States.

Approximately 6,600 University of Northern Colorado students are eligible to receive funds from the CARES Act. An email was sent to their Bear mail account from the UNC Office of Financial Aid that asks them to certify their financial situation in order to receive funds; the deadline to do so is Tuesday, June 30, and only half of those eligible UNC students have responded to the email.

Students can expect to receive an amount between $225 to $625, which is determined by factors such as their socioeconomic situation. Visit this UNC Financial Aid page for further details.

Also, payments to federal student loans and accrued interest have been suspended through September. Recent UNC graduates generally receive a six-month grace period anyways, so the benefit resides more so with graduates who have graduated over six months ago.

Marty Somero“The thing to be careful with here is that this is on federal student loans,” said Marty Somero, director of UNC’s Office of Financial Aid. “If an individual has private student loans, they should work with their individual lenders because there's no such immediate forgiveness of having to make loan payments or interest accrual on those private student loans.”

Somero discusses these topics and more in a podcast interview with Katie Corder, creative content producer at UNC.

Listen to the podcast:

Read the full transcript of the podcast episode:

Katie Corder:

Thank you for your interest and time in meeting with me, Marty Somero, to discuss potential questions that students, their parents, recent graduates, and faculty and staff members may have regarding the CARES Act, as well as the summer loan deferrals.

To start off, can you summarize what the CARES Act is, including its origins, who it impacts as well as when those impacts will take place?

Marty Somero:

Well, certainly, and thanks for talking to me today about these important topics. The CARES Act is probably as close to any type of political agreement we've had in this country in a long time, in that Congress and the president came together and knew that there had to be something done to help America in the midst of the COVID-19 pandemic crisis that was hitting in America.

So, when it comes to the whole CARES Act, there's quite a bit there. But the parts about financial aid, emergency monies for students and how that also impacts their student loans is actually only a fairly small part of the CARES Act, but what I'm kind of most versed with today, and what we can hopefully have information get out there that will help some of our UNC students and the families.

Corder:

Excellent. Thank you. And can you kind of tell me who the CARES Act impacts? And when those impacts are scheduled to take place?

Somero:

Sure. A lot of them have already taken place. Fortunately, within the CARES Act, UNC was able to receive $7.6 million in emergency funding. And, half of those funds, at least half of those funds, $3.8 million, had to go out to students who had need because of COVID-19, because of the campus disruption.

The Department of Ed later came out and said, to qualify for those emergency funds, a student had to be Title IV-aid eligible. Different conversations, different lawsuits and things going on, on that. But in general, that meant that a student had to have filed a FAFSA, which is the basic financial aid form, completed the process, been in good standing.

And at UNC, with the $3.8 million that we were given to give out to students in that regard, our president, Andy, was very adamant that he thought that everybody who was eligible should receive something, that every individual in the country has been impacted in some way by the pandemic and COVID-19.

We did about 6,600 automatic awards to Title IV FASFA eligible students. And we also did that in a manner that came along the lines of what the Department of Ed wanted, which was to take socioeconomic status into consideration.

So, the needier students on the FAFSA did get a little bit higher of the emergency funds, and those with a little bit higher incomes and stuff got a little bit less. But as I said, President Andy wanted everybody to get something.

So, about $2.5, $2.6 million of our $3.8 million was set aside for those automatic awards. From there, we still have money to give out, and those funds will be given out for students who were enrolled in spring, had impact because of COVID-19 and now are going to summer school where those needs are following them, or into the fall and spring semesters.

On the $2.6 million we gave out, or are trying to give out automatically, there was no application for it. But for these additional funds, there will be an application process where the student will be asked to kind of, not document, but state what their need was and ask for a specific dollar amount. And then a small committee will review those and try to help the students with funding for summer and/or going into the fall and the spring of the next year.

So, some of these things have already been done, some of them are in place, and some of them are yet to come.

Corder:

Excellent. And can you define what Title IV means?

Somero:

Title IV is basically your federal financial aid programs like families and things we think of as the Pell grant, is the most commonly known Title IV program. There's also all the federal student loans, which we'll talk about a little bit later. And I know most students in this day and age are well aware of the federal student loans. But it'd be basically the federal financial aid programs.

Corder:

Excellent. Thank you. And can you describe what current UNC students and their parents need to know about the CARES Act if they qualify?

Somero:

Again, going back to that, for students who should be checking their Bear emails. Students should be checking their Bear email all the time. But very specifically, they should be checking for an email that came from myself, the director of Financial Aid, it was preceded by one from President Andy saying how he wanted the monies to be distributed.

The students should find that email, and there's a short confirmation that they have to do in order for us to be able to get funds out to them. So, if families and students have not yet applied for those automatic emergency funds that President Andy wanted to get out the door, they can certainly call our office, or email our office, if they're not sure they qualified or not.

But basically, every student who is eligible got an email from myself — 6,600 students. And as of last week, I think we had about a third to half of the students have opened those emails and done the certification.

So, there's a lot of money still sitting out there for eligible families. And again, they don't have to apply for it, but they have to certify that they had expenses due to COVID-19 and the campus disruption.

And what'll happen with those funds is, the cashier, the UNC Bursar cashier, will get a refund out to the student, whether it be direct deposit or a check, right as soon as they do the certification. Probably take them a few days to maybe up to a week to process, depending on the demand and the time. But there is money that still families should be certifying they have a need for, to get those funds to them.

And then again, those students who are continued to be enrolled for summer, or in the next fall, if what we are able to offer wasn't sufficient enough, they've had greater needs, then there's an application process that they can use to try to get additional funding.

The other thing with this, Katie, is this is not financial aid. I'm the director of Financial Aid, and we're running it through our office and the Bursar, but it's not financial aid. It's not taxable money to the student. It doesn't count against other potential financial aid. It is truly just money to help reimburse the family and the student for expenses because of the change in how we delivered our educational materials here at UNC.

Corder:

Excellent. That's good to know. And so basically the main message is, students, if you haven't already, check your email and become certified.

Somero:

And get a check, and get some money sent to you. We will put a deadline on there of June 30. So, for the students that we've said, "Hey, you've got this money. It's yours if you certify it." If they don't certify by June 30, we'll put it back into that pot of money or that pool of money that we'll give out to students to be able to apply for it for summer and/or going into next fall and spring.

Corder:

Excellent thank you. Moving forward, do you think there will be any re-occurrences of this type of legislation for students or higher education institutions as the pandemic continues throughout this year?

Somero:

I do think there's hope and optimism that if the pandemic continues to be an impact on families that there could be additional legislation coming out of Washington.

It's hard to get agreement. That's why I think the CARES Act in and of itself was really an important step in working together for the country's benefit.

I'm optimistic that something will be happening, but I think a lot, with everything still to be determined based on, is there a second wave? Are areas able to reopen? Are jobs lost, or are they just furloughed?

We passed one set of legislation, so I'm optimistic that if things continue that maybe we can do another one. But in the short run, it seems like now we're back to more of the political stalemate. But there's always optimism that things can turn around still.

Corder:

And so, a student goes through the process, they become certified, and then your office processes it and then they get their check. How much should that student expect to get, or does it vary with that reimbursement number?

Somero:

As I said, the Department of Ed wanted socioeconomic consideration taken into place and how the schools gave out the funds. The most funds that a student would receive would be $625. The minimum amount of funds the student would receive is $225.

President Andy, again, wanted transparency very much on this. And so, if a family or a student goes out to the COVID-19 Financial Aid FAQ page, it's all laid out there exactly who gets what and how much, and the process. And that's also where students would go to apply for additional funding if they're enrolled for summer and/or in fall with ongoing need.

Corder:

And jumping to a related topic. I've also heard that recent graduates from UNC will also receive a form of support involving loan deferrals this summer. Can you describe this in more detail?

Somero:

Well, sure. And one of the nice things that did come out of the CARES Act, not just for recent grads, but for all individuals having to deal with the burden of federal student loans, is that, through September, all payments have been suspended, as well as interest accrual, on student loans.

Our recent graduates get generally a six-month grace period anyways. So, they're really not benefiting from the CARES Act legislation because they're just in their kind of normal grace period, deferment period. But it is something that, when you asked about additional legislation, I would think that that may be something we'd want to keep an eye on for, not only just our recent grads, but all individuals who are making student loan repayments.

The thing to be careful with here is that that is on federal student loans. If an individual has private student loans, they certainly want to be working with their individual lenders because there's no such immediate forgiveness of having to make loan payments or interest accrual on those private student loans. We're talking about what would you say would be the federal unsubsidized loan, federal subsidized loan, federal parent plus loan type programs.

The one nice thing is if a family or a student can make payments during this CARES Act time period with no interest accruing, it's kind of like a supercharged payment because it's going 100% in that case toward principal. So, if a student or an individual can make payment, it's wise to do so because it'll help buy down those loans quicker. If they can't, that's why the legislation was passed to try to help families with all the different bills and things they have going on right now to have that at least be one less worry in the immediate future.

And then, like I say, for the recent grads, it's a good time period for them to be going out to the studentaid.gov website. They have out there things that are called loan simulators, where the students can start plugging in some of their information and try to make a determination of what repayment plan is going to be best for them when they do get through with their grace period or any extended time period due to CARES Act or future CARES Act type legislation.

For the recent grads, they definitely want to be using that website, logging in, checking on their balances, making sure they understand exactly how much they owe, and then looking at the repayment options. The good news and the bad news is there's lots of options for repayments still currently.

Try consolidating those down into just a handful of them. But there are various options out there right now that a student will definitely want to be using that website and that loan simulator to try to figure out what's best for them in the short run and the long run in paying their loans.

Corder:

Excellent. So it sounds like even current students and graduates seem to have some ease on burdens financially going on here.

Somero:

They do, and even if they don't extend the CARES Act, student borrowers always have the opportunity to get other various deferments. If they say a student is going on to graduate school, once they re-enroll at least half time, deferment of payment can happen. If they're unemployed, there's unemployment deferments.

Worst-case scenario: there's things called forbearances. And forbearances are, maybe you're underemployed or in between jobs type thing, where you don't have to make payment, but interest is accruing. And so, that is a negative in that you're falling further behind on what you have to pay off in the long run, but it can be a lifesaver if you have to make a choice in the short run between rent, food and paying your student loans.

So definitely options out there for current borrowers as well as new borrowers as they get back into the repayment part of the loans.

Corder:

This is very helpful information. Thank you. And can you describe what resources, if any, are available at UNC for students, parents, or even recent grads that can help them with these initiatives? Or even general resources that are available to them regarding this topic?

Somero:

We are all on remote right now, but the opening of the Campus Commons and the creation of the Bear Central, which isn't totally a one-stop type of place, but an area where students can get help with their billing, get help with their financial aid, or their transcripts, their diploma, those types of things. And all our areas are still up and running all summer long, all school year long, regardless of what happens with the campus openings or not.

So just giving our offices a call, shooting us an email. We're all there still, we're all standing by to help, whether it be a recent grad, an incoming family or a continuing student get through the process.

And again, I think the other thing would be important for families is CARES Act, again, we're saying, "Well, it's not financial aid, it's help from the government." But we don't want to forget about financial aid, either. Financial aid award letters, notification aid offers, whatever you want to call it, are going out and have been going out for a while now.

And so, if a family hasn't received one, they want to make sure, one, did they reapply because you have to reapply for financial aid each year. As well as, is there any missing documents? Government is notorious with financial aid for having follow-up documentation needed or be required and the school gets to be the bad guy to collect it.

So, students should be looking for their aid offers for next year. If they have it, great. They can call us if they got questions on how to accept it or what it means. But if they don't have something out there, they certainly want to try to find out what's still required or what's still missing.

Corder:

Excellent. It's good to know that UNC is always student-centric and helping students even virtually during these unknown times.

Do you have any additional comments you'd like to add?

Somero:

Just, when it comes to the money that the CARES Act or financial aid, if in doubt, give us a call, shoot us an email. We can't always give the answer that families want to hear, but we're always here to try to help and try to find solutions whenever we can.

Corder:

Excellent. Those are all the questions I have. Thank you again for your time and expertise, Marty!

Somero:

Anytime and, yeah. Glad to help. And definitely, folks, if you have questions, get a hold of our office. That's why we're here. Go Bears.

—Produced by Katie Corder

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