The coronavirus outbreak has changed the entire landscape of student loan repayment and refinance. For instance, if you have federally held student loans, you do not currently need to make any repayment on them, as the government is offering automatic interest-free forbearance through May 1, 2022. (See below for more details.)
In order to give you the very latest information on how to deal with your student loans during this crisis, we’ve created this information center with updated guidance and links to our latest reports on new developments.
Note that some of our advice during this pandemic is a little different than what it is in normal times, so be sure to consult this page first when you have questions about your student loans. We’ll be updating this information center regularly to get you all the details on how to keep student debt from wrecking your finances during the outbreak.
Student Loan Hero wishes you and your loved ones safety and well-being during this difficult time.
The U.S. government has suspended all federal student loan payments and halted all interest charges, through May 1, 2022. At the same time, all collections and garnishments on federal student loans in default have stopped as well. Check out more information in our detailed report, as well as how the situation may change in the near future.
That said, there are some cases where it might make sense to keep paying down your federal student loan anyway. Here are some thoughts on whether to take advantage of the coronavirus student loan relief.
As for private student loans, each case may be different. Check out our earlier report on what some of the larger private student loan lenders are doing to help borrowers through this difficult time.
If you have a refinanced student loan, meanwhile, you can see what assistance is available from some of the top lenders by clicking here.
At this point, the interest-free halt to repayment only applies to federal student loans owned by the Department of Education. This covers most government-issued loans, but note that some Federal Family Education Loans (FFELs) are commercially-held, and some Perkins loans are owned by your college.
Undoubtedly, the differences between a federal loan being “held” or merely “guaranteed” is bound to confuse. If you’re not sure what kind of loans you have, start by logging into the Federal Student Aid (FSA) website with your FSA ID to view all your federal loans.
A FFEL loan borrowed before 2010 is unlikely to meet criteria for relief. For any Perkins loans, you could clear up the confusion by calling your loan servicer directly or contacting your school’s financial aid office.
If you have commercial or school-granted loans, you might think you’re out of luck. But there are a variety of ways to still pause or reduce your repayment, receive repayment assistance and generally manage your debt until the economy recovers. Check this report for all the details, but here’s a basic overview of three steps you could take to get relief on loans that don’t qualify for the new federal measures:
- Check your state’s options: Some state governments are stepping in to provide additional aid for struggling student loan borrowers, especially in terms of any debt held by the state. Contact your state’s education department for more information.
- Contact your lender or loan servicer: Speak directly with your lender or loan servicer (not a third party, as that could leave you vulnerable to student loan scams) and see if you can pause your monthly payments with a deferment or forbearance unrelated to COVID-19. Alternatively, you could lower the monthly payments on your ineligible FFEL debt by enrolling in the Income-Sensitive Repayment plan to cap your dues at a percentage of your annual income. If you recently suffered a loss of income, you could apply for a recalculated (decreased) payment obligation.
- Consider a Direct Consolidation loan: Your ineligible FFEL or Perkins loans can also be grouped into a Direct Consolidation loan. Besides getting you covered for a portion of the 0% interest and payment-suspension period, consolidation would also deliver a single monthly payment and make you eligible for income-driven repayment (IDR) plans. Just be mindful that consolidation could erase any progress you’ve made toward a relief program like Public Service Loan Forgiveness.
- Talk to your employer: If you have federal (or private) loans that don’t qualify for the student loan payment suspension, consider bringing up your concerns with your human resources department. As part of the coronavirus economic rescue package, the government gave employers temporary tax relief for contributing up to $5,250 toward their employees’ student loan payments. This benefit is slated to stay until at least 2025, and it could cover any student debt, whether federal or private.
If you’re in desperate straits, take a look at these posts for advice on how to put food on the table and cover your housing costs.
Likewise, here are some ideas for earning money during the coronavirus pandemic — not all of these work-from-home opportunities will still be available, but some will.
As for that student debt, at least your federal student loans won’t be a problem now that the government has suspended all repayment. For your private loans, however, you should definitely contact your lender to see about pausing your payments via forbearance, although this might not be interest-free.
How good an idea refinancing is right now will depend on your personal situation, and especially whether you’re talking about federal or private loans. If you’re concerned about your finances or losing a job, you’ll likely want to hold tight on your federal loans, as all payments are suspended.
On the other hand, interest rates have plunged in reaction to the coronavirus pandemic, so it’s a great time for deals if you’re considering refinancing — particularly with private student loans, since those payments haven’t been suspended, and you won’t be giving up any federal protections.
As for refinancing federal student loans, first make sure that your finances are solid and you’ll be able to afford the payments before you trade the government protections on your federal loans for a potentially lower interest rate.
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The relief programs for federal student loans mentioned above also extend to any parent loans you might have taken out for a child, grandchild or other student — so long as they’re held by the government.
This includes the suspension of payments, the halt to collections for delinquent loans, and even the awarding of credit toward student loan forgiveness, regardless of whether you pause repayment (see next question).
For a parent-focused rundown of the benefits currently on offer as part of the coronavirus relief efforts, as well as what you might be able get from private lenders, check out our report on parent loans during the pandemic.
You will still be able to make progress toward Public Service Loan Forgiveness or other federal forgiveness programs — even as you take advantage of the six-month suspension of payments, the programs will still consider it as if you had kept up your repayment, the Consumer Financial Protection Bureau said.
Standardized tests for college, such as the SAT and ACT, may be available but there is limited testing capacity to follow local health guidelines. Make sure to check with your local testing centers for any guidelines or news about closures.
Many colleges have announced they will be “test optional” for the foreseeable future, meaning applicants won’t be required to take one of these tests. Since policies will differ from school to school, check out the admissions pages from the websites of your preferred colleges and universities.
If you get a phone call or see an ad promising student loan relief in exchange for a fee, you could be dealing with a student loan scam.
Know that you should never have to pay anything to put your loans into forbearance. Similarly, your lender is unlikely to contact you to offer forbearance or deferment options — it’s up to you to reach out to your lender.
During these tough times, beware any predatory loan companies that want to charge you money or are making promises that seem too good to be true. You can find out more by clicking here.
Interested in refinancing student loans?
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