Student loans may be the last thing you can pay, but the government is extending a hand.
Many around the country are in panic mode. With most of the country on shelter-in-place orders, millions of people are out of work and receiving reduced pay, or out of work completely. Even with the help of unemployment through the recent Stimulus Package, it’s hard to make ends meet. Fortunately, for those with (or without) coronavirus and student loans, there is help.
No Interest for 60 Days
Let’s start with the most important news – there’s no interest for 60 days. According to the U.S. Department of Education, interest rates on all federally held student loans will remain at 0% for at least 60 days, so stay tuned – it may be longer depending on what happens.
Most federal loans qualify, especially if you took the loans out after 2010. If you are unsure, you can check the status online or call the servicer that holds your loan.
Note that your payment likely won’t change during this time, but what you pay will directly pay down any accrued interest and then outstanding principal, which means you'll be out of debt sooner.
You can Request Forbearance for 60 Days
If you can’t afford your payments at all, you have the right to request forbearance for 60 days. According to Secretary DeVos, all servicers must approve forbearance requests made after March 13, 2020. The forbearance must last for at least 60 days. During this time you don’t have to make payments and won’t be penalized for not making a payment.
Automatic Suspension of Payments for Delinquent Borrowers
Secretary DeVos also authorized an automatic forbearance for any borrowers already more than 31 days late on their student loans, starting with March 13, 2020. This means you won’t receive phone calls or letters in the mail. You also don’t have to worry about the offset of any federal refunds or Social Security payments during this time of dealing with coronavirus and student loans.
Should you Consider Forbearance?
While forbearance sounds ideal for every student loan borrower, that’s not always the case. Stop and think about your current situation. Ask yourself:
- Do you have an Income Based Repayment Plan? If so, let your servicer know of your unemployment or reduced wages. They’ll update your payment accordingly, which may be more beneficial than a 2-month deferral.
- Do you need the payments for your Public Service Forgiveness Program? If you put your loan into forbearance, the payments don’t count toward your time. If you are on an Income Based Repayment plan, though, even if your payment is $0, it counts, keeping you on track to have your loan balance forgiven. In fact, you’ll have a larger balance forgiven.
The help for student loans is continually changing as the government tries to stay ahead of the crisis. If you have any questions, it’s vital that you stay in contact with your loan servicer. They will have the most up-to-date information and the tools to help you during this trying time.