Graduates of the class of 2020 have been placed in a difficult position by the COVID-19 pandemic. Their last semester has been transitioned to fully online classes, in-person graduations have almost all been cancelled and the post-graduation job market is expected to be difficult. However, government assistance programs are expected to help both current students and recent graduates financially.
Employment landscape
Many industries, including popular destinations for young college graduates, such as Advertising Agencies in the United States, are expected to experience reduced employment as companies potentially lay off employees and freeze hiring in light of the general economic contraction associated with this pandemic. However, some industries that provide services that help individuals socially distance themselves, such as the E-Commerce & Online Auctions industry may provide recent graduates with employment opportunities in an otherwise difficult job market. For example, Amazon has announced that it is hiring in order to meet increased demand for its services.
Overall, employment prospects of this graduating class, and for the ones that follow them, depend on the extent of the economic contraction caused by the COVID-19 pandemic and the length of time that it takes for a recovery to begin. With that said, the duration of this recession is subject to a high degree of uncertainty, and students in this graduating class may be incentivized to seek employment in other, more active corners of the economy including the medical services supply chain, software development, logistics and e-commerce.
Education Stabilization Fund
Students are receiving government assistance from the recently passed Coronavirus Aid, Relief and Economic Security (CARES) Act. The CARES Act appropriates approximately $14.0 billion directly to higher education institutions, at least half of which is required to be used for emergency financial aid for both undergraduate and graduate students. Many students eligible for financial aid will be able to receive up to the maximum allowed under the federal Pell Grant program ($6,195 for the current academic year). This emergency financial aid will also be exempt from income tax, as it will be considered necessary relief as a result of a qualified disaster under the US tax code. Additionally, students not listed as dependents on their parents’ tax returns are eligible for the $1,200 stimulus package authorized for Americans with an adjusted gross income under $75,000.
The CARES Act also includes assistance for student loan borrowers, including placing the loans under forbearance from March 13 to September 30, 2020 and lowering the interest rate on these loans to zero percent during that time period. During the forbearance period, payments are not required and individuals who are in default will not have their wages or tax refunds garnished. It should be noted that this only applies to federal loans owned by the US Department of Education, and does not apply to private student loans or federal loans owned by other departments within the federal government.
