- You can pause two student loan payments, but you’ll still owe the money
- If you want to pause payments
- If you’re behind on your student loan payments (or get behind)
- If you are seeking Public Service Loan Forgiveness
- If you want to continue making payments
- If your income has changed
- How to work with your servicer
- More from NerdWallet:
- Coronavirus Relief for Federal Student Loan Borrowers in Place Through Sept. 30, 2021
- What federal student loans are eligible for relief?
- Converting Perkins or FFELP loans into federal direct loans
- Getting credit toward loan forgiveness
- Getting credit toward loan rehabilitation
- Borrower protections
- What if I want to keep making payments?
- What happens when coronavirus relief expires?
- Student loan refinancing
- Student Loans During The Coronavirus Crisis
- What has happened with student loan repayment during the coronavirus pandemic?
- Private student loans
- How to find loan relief for private student loans
- Private student loan lenders offering relief
- The bottom line
- Learn more:
- Everything You Need to Know About Student Loan Relief During Coronavirus
- If you suspended your payments, check your credit reports
- How the stimulus package affects federal student loans
- Should you continue paying private student loans if payments are suspended?
- Should I continue to pay my private student loans?
- What relief is available if I’m having trouble making payments?
- How do I find out if my private loans are eligible for a payment pause under the CARES Act?
- The bottom line
You can pause two student loan payments, but you’ll still owe the money
Federal student loan borrowers have an opportunity to suspend payments — without incurring interest on them — for 60 days, the Department of Education announced Friday. This policy applies only to federal loans, not to private student loans.
If you want this option, called a forbearance, it will not be automatic — you must request it from your servicer.
Make no mistake: This is a pause on payments, not forgiveness. Your debt will be waiting for you when repayment begins at the end of the two-month forbearance, unless the policy changes.
And the policy could well change. The measures were made in response to the economic fallout related to the spread of coronavirus, and COVID-19, the illness it causes. Neither the outbreak nor its economic impact shows signs of slowing, and lawmakers have proposed more dramatic measures.
“I do think there’s going to be additional waves of relief, depending on how this pandemic plays out,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors.
Until then, here’s how to decide what to do next.
If you want to pause payments
You can call your student loan servicer to request a forbearance to stop student loan payments for at least two months, retroactive to March 13. Interest won’t continue to accrue, as it normally would.
A forbearance could give you breathing room to address other financial concerns.
If you are jobless or working reduced hours, a forbearance may free up cash to pay the rent and utilities or grocery bills. Even if your pay is unaffected, a forbearance could help you divert some money toward building an emergency fund or help you pay another, more pressing debt.
Usually forbearance is granted at the discretion of the servicer and interest will continue to build. In this case, the Education Department has instructed all servicers to approve at least a two-month forbearance for all borrowers, and due to the waiver, no interest will grow.
If you’re behind on your student loan payments (or get behind)
Payments are automatically suspended for any borrower more than 31 days delinquent prior to March 13 and those who become more than 31 days delinquent in the coming days. That means the loans are placed in forbearance and won’t default.
Default on federal loans happens when a payment is 270 days past due, sending your loan to collections and exposing you to damaged credit, garnished wages and seized tax refunds.
There is no additional relief, at this time, for borrowers whose loans are currently in default.
If your loans are already in forbearance, any interest that already accrued will still be added to your loan principal when your repayment begins, but during the 60-day waiver no new interest will be calculated.
If you are seeking Public Service Loan Forgiveness
A forbearance won’t undo your progress toward Public Service Loan Forgiveness, or PSLF, but the months your loans are in forbearance won’t count toward forgiveness, either.
Also see: Why student loans are a kind of debtor’s prison, and what needs to change
Only full payments count. But PSLF payments don’t need to be consecutive, so if you need a forbearance you won’t lose credit for the payments you already made.
If you want to continue making payments
Some borrowers might want to continue making payments on federal loans — those who are working toward PSLF, for example, or who want to pay down their debt faster.
If you do continue making payments, you won’t pay any new interest on your loans for 60 days, retroactive to President Donald Trump’s original March 13 announcement temporarily suspending student loan interest. This 0% interest rate will save you money overall, even though your payment won’t be lower.
The full amount of your payment will be applied to the principal balance of your loan once all interest accrued prior to the president’s announcement is paid.
If your income has changed
If you experience a change in income and still want to keep your payments going, the best way to lower your payment to something more affordable is to apply for income-driven repayment. You’ll get a new payment that is your family size and a percentage of discretionary income. You can apply online at studentaid.gov.
How to work with your servicer
To request a forbearance, you need to contact your student loan servicer — it’s the private company that manages payment of your federal loans. But you don’t have to do anything to get the 0% interest rate.
You might : A canned cocktail for when you’re cooped up at home during the coronavirus pandemic
Mayotte encourages borrowers to be patient with their servicers.
“These are unprecedented times, and I can assure you the servicers did not have a lot of notice,” says Mayotte.
To find out which loan servicer is yours, log in to studentaid.gov with your FSA ID.
You can get in touch with all of the loan servicer contact centers by calling 1-800-4-FED-AID.
For additional information visit studentaid.gov/coronavirus for forthcoming details.
More from NerdWallet:
- How to Change Your Student Loan Repayment Plan
- Student Loan Servicers: Who They Are and What They Do
- Deferment vs. Forbearance: Which Is Right For Your Student Loan?
Coronavirus Relief for Federal Student Loan Borrowers in Place Through Sept. 30, 2021
Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”
Payments and interest on most federal student loans have been suspended through at least Sept. 30, 2021 to help borrowers cope with the economic impacts of the coronavirus pandemic.
If you’re repaying eligible federal student loans:
- Your monthly payments are automatically suspended, and you won’t be charged interest during this period.
- While your monthly payments are suspended, you can still earn credit toward loan forgiveness if you’re in a qualifying repayment plan.
- If you wish to continue making your monthly payments, you may make faster progress paying down your debt, because all of your payment will go toward your loan principal.
Learn more about coronavirus relief for federal student loan borrowers:
What federal student loans are eligible for relief?
Payments and interest have been suspended from March 13, 2020, through Sept. 30, 2021, for four types of federal student loans:
- Federal Direct Loans (including PLUS loans)
- Federal Family Education Loan Program (FFELP) loans held by the government
- Federal Perkins loans held by the government
- Defaulted Health Education Assistance Loan (HEAL) loans
Student loans issued by private lenders and state student loan authorities are not covered by the relief measures. Some Perkins loans are owned by schools and do not qualify for federal relief. Neither do roughly $142.4 billion in FFELP loans that are owned by private lenders.
If you’re not sure if your loans qualify for federal relief, or you’re having difficulty making payments on private student loans, contact your student loan servicer.
Converting Perkins or FFELP loans into federal direct loans
If you have Perkins or FFELP loans that are not held by the federal government, you can convert them into a federal Direct Consolidation Loan, which would be eligible for coronavirus relief.
Just keep in mind that there can be drawbacks to federal loan consolidation, such as the potential to reset the clock on loan forgiveness. If you have outstanding interest on loans that you consolidate, that interest will be capitalized and added to your principal balance.
Getting credit toward loan forgiveness
If you’re enrolled in an income-driven repayment plan and are hoping to qualify for loan forgiveness after making 20 or 25 years of payments, you will continue to receive credit toward loan forgiveness while your payments are suspended.
While their payments are suspended, borrowers who are working full-time for a qualifying employer will also receive credit toward the 10 years of payments needed to qualify for Public Service Loan Forgiveness.
Getting credit toward loan rehabilitation
If you had previously defaulted on your federal student loans and entered into an agreement to rehabilitate your loan by making nine monthly payments, all of your suspended payments will count.
If you enter into a new rehabilitation agreement during the coronavirus relief period, you will only get credit for the suspended payments made after your agreement takes effect.
Loan servicers have been instructed not to report borrowers to credit bureaus as delinquent while their payments have been suspended.
The Department of Education is also suspending “involuntary collection” on defaulted loans, and will refrain from garnishing wages, tax returns or social security checks.
What if I want to keep making payments?
The suspension of monthly payments and the interest waiver on federal student loans is automatic — you don’t have to apply — and retroactive to March 13, 2020. Loan servicers have been instructed to place loans in administrative forbearance and stop collecting payments.
Borrowers who want to continue making payments on their federal student loans may be able to save money by paying them down faster. That’s because once you’ve paid any interest you owed before March 13, all of your monthly payment will go toward paying down loan principal.
If you want to keep paying down your federal student loans, you need to contact you loan servicer to opt forbearance.
What happens when coronavirus relief expires?
Coronavirus student loan relief Congress provided through the CARES Act has been extended several times. Lawmakers may choose to provide additional relief, such as loan forgiveness.
If and when coronavirus relief measures finally expire, federal student loan borrowers who are having trouble making their monthly payments can seek relief by enrolling in an income-driven repayment plan, or applying for deferment or forbearance.
An IDR plan can be more advantageous than forbearance, because some borrowers may eventually qualify for loan forgiveness after 10, 20, or 25 years of payments. If you’re already enrolled in an income-driven repayment program but have lost income because you’ve been laid off or had your hours cut, you can ask your loan servicer to recalculate your monthly payment.
Student loan refinancing
Federal student loans provide borrower protections that can be important during times of economic uncertainty, including access to income-driven repayment plans and the right to place loans in deferment or forbearance in some situations. Borrowers refinancing federal student loans with private lenders lose access to these programs.
However, incentives remain for refinancing private student loans at rates that are low by historical standards. Incentives to refinance include:
- Reducing monthly student loan payments by extending the loan term.
- Reducing total repayment costs by refinancing at a lower interest rate.
- Locking in a fixed interest rate by refinancing a variable-rate loan with a fixed-rate loan.
If the interest waiver on federally-held loans expires on Sept. 30, 2021, many parents, professionals and postgraduate degree holders repaying high-interest federal PLUS loans will again have incentives to refinance.
Home » All » Student Loan Refinancing » Coronavirus Relief for Federal Student Loan Borrowers in Place Through Sept. 30, 2021
Student Loans During The Coronavirus Crisis
The coronavirus pandemic has caused many people across the U.S. to lose a reliable source of income. Fortunately, there are still policies designed to help people financially weather the crisis, including programs that can help borrowers suspend student loan payments. If you’re concerned about making your next payment on a federal or private student loan, read on to see your options.
What has happened with student loan repayment during the coronavirus pandemic?
Student loans were one of the first areas to be addressed when the pandemic hit.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law March 27 and worth roughly $2 trillion overall, allowed borrowers to suspend payments on federal student loans for six months, through Sept.
30, 2020, and automatically waived interest during this time frame. Additionally, the Department of Education suspended collection attempts and wage garnishments, Social Security offsets and tax refund seizures on defaulted federal student loans.
On Aug. 8, 2020, President Trump issued an executive order extending many of the protections for borrowers of student loans. Through Dec. 31, 2020, federal student loan payments continue to be suspended, collections are stopped and interest is waived. While the 2020 election has caused many to speculate about an extension of this relief, there is currently no extension planned.
All student loans that are owned by the U.S. Department of Education are currently eligible for suspension of required payments and waiver of interest.
Additionally, all collection attempts and wage garnishments have been suspended.
Keep in mind that just because you no longer are required to make a payment, it still may make sense to continue to pay in order to shorten the time you have an outstanding student loan balance.
For the latest information, check out the coronavirus information page on the Federal Student Aid website.
Private student loans
Private student loans, Federal Family Education Loan (FFEL) Program loans owned by commercial lenders and Perkins Loans held by your school are not eligible for these benefits. If you have a private student loan, your payments and interest will not automatically be waived. You will need to continue making your payments on time or contact your loan servicer about hardship options.
However, many private lenders have programs in place to help people who have been impacted by the coronavirus crisis. These programs may include temporary forbearance, deferment or adjusted repayment plans.
How to find loan relief for private student loans
Help for federal student loan borrowers is automatic, so you won’t need to contact your servicer about postponing payments and waiving interest unless you have questions. But every private lender and loan servicer is offering different relief options. Here’s how you can request help:
- Call your loan servicer. Below, we’ve listed 10 private lenders and loan servicers and how to reach them, but the list is not comprehensive. When you call or email your loan servicer, explain your financial situation and how you’ve been impacted by this crisis. For example, you or your partner may have been laid off or furloughed, or you might have concerns about your future ability to make your student loan payments. Tell your lender when you anticipate being able to resume loan payments.
- Ask about assistance programs. Your options will depend on the servicer and your individual situation. For example, your loan servicer may offer to suspend payments for a few months, temporarily lower your interest rate or offer interest-only payments. Some servicers are treating each situation on a case-by-case basis.
- Ask questions. Before agreeing to start the program, confirm the exact terms, such as fees involved, how long the relief lasts and whether interest accrues. You also should find out whether that accrued interest “capitalizes,” which means it’s added to the unpaid principal balance. Create a plan for how you’ll resume payments at the end of the forbearance period.
- Enroll in your loan servicer’s program. Ask for the details in writing and complete the process to enroll in your loan servicer’s program. Make sure that you receive confirmation that you’ve been enrolled.
- Consider refinancing. As interest rates drop, it’s getting cheaper to refinance private student loans. Shop around for the best rate if you’re considering this move. Refinancing can help you save a substantial amount of money if you can shave a percentage point or two off your current interest rate. It can also help if the new lender offers more flexible hardship options than your current lender.
Keep in mind that enrolling in plans that suspend or lower payments ultimately extends the life of the loan, which costs you more in interest overall. If you can afford to keep making payments as scheduled, it may be in your best interest to do so.
Private student loan lenders offering relief
Below is a list of private lenders that are offering some kind of relief to borrowers as of Nov. 19, 2020. If your lender is not listed here, we recommend checking your lender’s website or reaching out by phone.
- Citizens Bank says that private student loan borrowers who are experiencing financial hardship may qualify for payment assistance for up to 90 days and late fee waivers. Interested borrowers can call the bank at 1-866-259-3767 or reach out to their loan servicer.
- College Ave says that borrowers may be eligible for its Disaster Forbearance program. To see if you apply, call College Ave at 844-803-0736. It is not able to process requests via email or chat.
- CommonBond borrowers can apply for natural disaster forbearance, which won’t count toward standard forbearance limits. The online lender is waiving late fees and allowing private student loan borrowers to postpone payments through the end of the national emergency declaration. Loans will continue accruing interest, but you won’t pay fees to join the program.
- Discover private student loan borrowers can call the bank at 800-223-5614 to discuss hardship options.
- Earnest borrowers can apply for a short-term forbearance program. You can reach out via Earnest’s email portal or call 888-601-2801. Entering this program makes your eligible loans current and also postpones payments for one full month. When you contact the company, provide details of how you have been financially impacted, the industry you (or other household members) work in and an idea of when you can resume payments on your loan. Interest accrues while your payments are postponed, but it won’t be capitalized at the end of forbearance.
- Laurel Road private student loan borrowers who are financially impacted by the coronavirus may be eligible for a forbearance of three payments. To see if you are eligible, reach out to MOHELA, which services Laurel Road’s loans. Call 877-292-6845 to discuss hardship relief options, including forbearance or an extension. Interest during a forbearance will continue to accrue, and your monthly payment will be recalculated at the end of the forbearance.
- LendKey, which partners with banks and credit unions to help borrowers refinance student loans, says that borrowers can reach out via email at email@example.com. You may also call your loan servicer with questions and to discuss hardship options.
- Navient, which services federal and private student loans, says that qualified borrowers may be eligible for its short-term forbearance program. To see if you are eligible, contact Navient at 888-272-5543. Interest will accrue but won’t be capitalized at the end of the forbearance period. Navient also offers other hardship options to private loan borrowers, including a rate-reduction program, interest-only payments and an extended repayment plan.
- Sallie Mae borrowers can chat with the lender about private student loans online or by calling 833-558-6577 to see what assistance options may make sense for them.
- SoFi borrowers can apply for a 60-day forbearance during the coronavirus pandemic, with the option to extend for an additional 30 days.
The bottom line
While federal student loans continue to have loan payments suspended, collections stopped and interest waived, many private student loan lenders are also providing options. If you are experiencing economic or other hardship due to the coronavirus crisis, know that you do have options.
Reach out to your student loan lender or servicer to see what options are available to you. Make sure that you fully understand what happens to any unpaid interest or principal, and get the terms in writing.
And remember, even if you can take advantage of a forbearance program, it usually doesn’t make sense unless you need to.
Going into forbearance will extend the length of your loan, and it may cause you to pay additional interest over the course of your loan.
Everything You Need to Know About Student Loan Relief During Coronavirus
- Teddy Nykiel
If you’re facing a reduced or slashed income as the coronavirus spreads, keeping up with your bills may become increasingly challenging—especially if you’re among the more than 43 million people in the US who have federal student loan debt.[Editorial note: The evaluations of financial products in this article are independently determined by Wirecutter and have not been reviewed, approved, or otherwise endorsed by any third party.]
If you have federal student loans, help is on the way. But be patient: It could be a week or two before you see the changes applied to your account.
Check your student loan account regularly, and pay attention to updates posted on your loan servicer’s website, as well as on the Federal Student Aid coronavirus information page.
If you need to call your student loan servicer, expect to wait longer than usual to get through.
If you suspended your payments, check your credit reports
On May 20, Politico reported that federal student loan servicer Great Lakes Educational Loan Services provided incorrect information about nearly 5 million borrowers’ loan payments to the three main consumer credit bureaus, Equifax, Experian, and TransUnion.
Why this matters: As part of the CARES Act, if a student loan borrower chose to defer their monthly payments between April and the end of September, each suspended payment was to be reported to the bureaus as an on-time payment.
However, due to a coding error, Great Lakes reported these payments as “deferred.” As a result, some borrowers found that the “deferred” payment status on their credit reports hurt their credit scores.
And any negative information on your credit reports could potentially influence how lenders, landlords, and employers view you in the future.
Great Lakes said it’s working quickly to fix the problem. In the meantime, if your student loans are serviced by Great Lakes, you should check your credit reports. Here are some ways to do it for free:
- Through April 2021, you can view your credit reports from all three bureaus for free once a week at AnnualCreditReport.com.
- Credit Karma provides free credit reports from Equifax and TransUnion.
- Experian offers free access to your credit report once every 30 days.
If you find that your suspended loan payments were reported incorrectly as “deferred,” download a PDF of your credit reports for your records, then call Great Lakes and request that it changes your payment status with all three bureaus. (But be prepared to spend a lot of time on hold.)
How the stimulus package affects federal student loans
The $2 trillion stimulus package signed into law by President Donald Trump on March 27, 2020, provides some relief to federal student loan borrowers through September 30, 2020.
The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act)—which will provide checks of up to $1,200 to many Americans, increased unemployment benefits, and forgivable loans for small businesses, among other relief measures—also expands on the president’s March 13 directive regarding waived interest on federal student loans.
The Department of Education will ly issue more guidance about what the CARES Act means for student loan borrowers, said Ben Miller, who previously worked in the department’s Office of Planning, Evaluation, and Policy Development, and is now vice president for Postsecondary Education at the Center for American Progress, an independent, nonpartisan policy institute based in Washington, DC.
“Congress wrote the bill quickly,” Miller said. “There’s only so much detail.”
what we know now, here’s what the stimulus package means for people who have federal student loans—and what borrowers with private student loans can do.
Feel free to opt out at any time
Teddy Nykiel is a freelance journalist covering issues including student loan debt and personal finance. Previously, she spent nearly five years reporting on those topics as a staff writer for NerdWallet. Her work has been published by national outlets including the Associated Press and USA Today.
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Should you continue paying private student loans if payments are suspended?
You may have heard the good news: the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed by Congress in March and has supplied $2 trillion of relief, put all payments on most federally held student loans on hold through September 30. That’s provided some much-needed relief to many of the 43 million people with federal student loans.
Borrowers with eligible federal loans were automatically placed into administrative forbearance — meaning they’re not required to make principal and interest payments, and their loans have a 0 percent interest rate, until September.
The bad news is the bill has not suspended payments on private student loans.
So if money is tight right now and you have private loans, you may want to consider refinancing them in order to lower your monthly payments and lift some of your financial burden.
Your savings could be significant, considering that interest rates have plummeted in recent months. Pro tip: you can visit Credible to compare prequalified student loan refinancing rates from up to 10 lenders.
10 OF THE BEST STUDENT LOAN REFINANCE COMPANIES
You can also use Credible’s student loan refinancing calculator to help determine what your new monthly payments would be before you pull the trigger. Or fill out some simple information to find out what rates you qualify for within minutes.
There’s a silver lining, though: Some private lenders are offering to suspend payments for private loan borrowers — but there are some important caveats that you need to be aware of before you stop making payments.
These three questions will help you determine whether it makes sense to continue paying private student loans even if your payments have been suspended.
Should I continue to pay my private student loans?
If your private loan payments have been suspended, your lender probably provided you forbearance — an agreement that allows you to temporarily postpone payments, but interest will continue to accrue. If that’s the case, pausing your loan payments may end up costing you a significant sum of money in the long run.
THIS IS WHY STUDENT LOAN REFINANCING RATES ARE GOING DOWN
Another reason to keep up with your private loan payments? If your job is stable, you don't have other debt, and you have a sufficient emergency fund (read: enough to cover three to six months’ worth of living costs), chipping away at your private loans’ principal will help you stay on track and pay off the debt faster than if you decide to pause your monthly payments.
What relief is available if I’m having trouble making payments?
Forbearance isn’t your only option if you’re struggling financially, but your options will depend on your loan servicer. For example, Navient offers hardship relief to private loan borrowers, including a rate-reduction program, interest-only payments and an extended-repayment plan.
In addition, a handful of states — including California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, New York, Vermont, Virginia and Washington — have reached agreements with private lenders and servicers to have them temporarily:
- Waive late fees.
- Stop issuing negative credit reports.
- Pause debt-collection lawsuits.
- Help borrowers enroll in debt assistance programs.
How do I find out if my private loans are eligible for a payment pause under the CARES Act?
You can ask your loan servicer, go to StudentAid.gov/login, or call 800-433-3243 to see if your private loans are eligible for forbearance during this time.
WHY YOU SHOULDN'T REDUCE STUDENT LOAN PAYMENTS
Another valuable resource for information is StudentPandemicAid.org — it’s a free guide for anyone with student loans who has been affected by the pandemic and is looking to understand their options. You can also check out the Student Borrower Protection Center’s free webinar on how to manage student loan debt during the pandemic.
The bottom line
If you can continue paying off your private loans without jeopardizing your finances, it’s generally a smart approach to keep up with your payments. But, if you’re having trouble making ends meet, there may be ways you can pause your monthly payments while you recuperate financially and regain your footing.
Don’t forget to visit Credible to research rates from different private student loan companies to ensure you save as much money as possible.