Connie J. Schlosberg
Like most of the world, Americans are currently facing COVID-19 and are adjusting to a new normal. Even as individuals cope with unemployment and living expenses, they continue to owe thousands of dollars in student loans. During this uncertain time, it's important to stay informed about the options available for managing student loans.
If you are impacted by the Coronavirus pandemic, you may be eligible for student loan debt relief. consider the options that you for postponing student loan payments. Here are the things you need to know about student loans during COVID-19.
CARES Act for Federal Loans
In March 2020, the U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act includes provisions for Americans who have student loan debt. As part of this new federal legislation, student loan lenders are required to suspend payments and interest accrual on all loans financed by the U.S. Department of Education. Americans with federal student loans will have administrative forbearance and owe 0% interest rate until September 30, 2020.
If you are an eligible borrower, you will have received an email. Use the link in your email to sign into your student loan accounts, and check your student loan status. You can also learn more about how the CARES affects you on the Federal Student Aid's COVID-19 information page.
Other Student Loan Relief Options
In addition to the CARES Act, student loan borrowers may be eligible for the following options:
- Income-Driven Repayment (IDR): You may be able to lower your monthly payments based on income and family size. If you are already enrolled in an IDR plan, you can request to have your monthly payment recalculated. If your income has decreased due to experiencing a Coronavirus-related pay cut, furlough, or layoff, recalculating your payment amounts can be helpful.
- Unemployment Deferment: If you are unemployed, you may be eligible to defer all payments for six months. In some cases, you may even be eligible for interest subsidies.
Payment Options for Private Loans
What happens if you owe private student loans, which are not financed by the U.S. Department of Education? If you've been impacted by COVID-19 and are having trouble making student loan payments, you may still be able to reduce or postpone your payments. Call or email your lender to ask about the following options:
- Rate Reduction Plan: This lowers the interest rate on your student loans and reduces your monthly payment.
- Other Plans: You may qualify for an interest-only or extended repayment program.
- Refinancing - Refinancing can help to lower your monthly payments. Especially as interest rates have plummeted during Covid-19, refinancing your private student loan can help to lower your interest rates and make monthly payments more manageable. The rates on refinanced loans are theorized to drop to about 2.5% fixed and 1.25% variable. Those with federal loans should be wary, however, as refinancing may disallow you from a number of benefits.
In the past month, Coronavirus has left more than 16 million Americans without jobs. This means that student loan debt, already a challenge for many individuals, has become even more of a problem for the jobless. If you're having trouble with student loans during this difficult time, consider the options to reduce or postpone your loan payments. If you need immediate relief due to the pandemic, request a COVID-19 national emergency forbearance. This forbearance is valid for 90 days.
DebtMD is committed to assisting you during this crisis. We partner with student loan lenders dedicated to help you during this challenging time. All lenders are highly vetted by DebtMD and must meet specific standards and certifications to partner with us. To access qualified debt solution providers, search our directory.
Looking to refinance your student loans? View our student loan refinancing partners here.