Introduction
If you’re like most of America, your student loan payments are probably a monthly burden that leaves you with less money than you’d like to spend. And in February 2019, things got even worse for borrowers when President Trump signed into law a temporary halt on federal student loan payments while the United States battled an outbreak of the coronavirus. But depending on whether or not your federal loans qualify for this relief, things could get even worse — or better — for many Americans who have private student debt.
if you have federal loans, your payments are suspended for 6 months.
If you have federal student loans and the Federal Student Aid (FSA) determines that you qualify for an economic hardship deferment, your payment will be suspended for six months. This means that during this time, you aren’t obligated to pay back any of your debt.
If you think you qualify for an economic hardship deferment, contact the FSA at 800-4-FED-AID (800-433-3243).
This will reduce the amount of interest that accrues on your loans.
If your student loans are in a deferment, forbearance, or grace period and you receive a bill from your lender for interest that accrued during the time the loan was on hold, you may be able to get the interest waived.
To do this, contact your lender and explain that you received a bill for interest accrued while the loan was on hold. The lender may ask you to provide proof of payment of that interest as well as other documentation showing that you were eligible for an affordable repayment plan.
The federal government ordered student loan payment relief over the next several months in response to the coronavirus, but many borrowers have been confused about what exactly the guidelines entail.
The federal government ordered student loan payment relief over the next several months in response to the coronavirus, but many borrowers have been confused about what exactly the guidelines entail.
In a press release on July 5, Secretary of Education Betsy DeVos said that she would “use my authorities” to delay student loan payments for those affected by the virus. As of now, there are no official guidelines for this relief program—but it is likely that any eligible borrower will receive at least six months of deferment or forbearance.
If you want your loans to be deferred or put into forbearance, contact your servicer immediately (this can be done online or over the phone). If you’re not sure which company owns your loans, contact one of these agencies:
- Department of Education (1-800-4-FED AID)
President Donald Trump signed into law that student loan payments will be paused for six months.
The law is called the Student Loan Repayment Forgiveness Program. It means that if you have federal student loans, your payment will be paused for six months.
This new law is one of many ways in which we are working to protect student loan borrowers from their debt burden. We want to make sure that anyone who has taken out student loans can afford to pay them back without having to worry about making ends meet or putting food on the table every month.
You can apply for this benefit through StudentAid dot gov/student aid/borrower-help/special-programs/.
If you are one of the millions of Americans who have a student loan with a private lender, there is no such relief from lenders or the federal government.
If you are one of the millions of Americans who have a student loan with a private lender, there is no such relief from lenders or the federal government. Private loans are not eligible for the pause.
The pause is only for federal loans, which means those issued by Uncle Sam. Some private lenders allow borrowers to consolidate their federal and private loans into one “consolidation” loan that can be eligible for the interest rate pause. But this method doesn’t work for everyone; your eligibility depends on how many other types of debt you have (mortgage? credit card?), as well as whether your employer will reimburse you for them (or if they already did).
If you have a federal student loan through the Department of Education or an outside servicer, you qualify for this payment pause.
If you have a federal student loan through the Department of Education or an outside servicer, you qualify for this payment pause.
This is a temporary measure, not a permanent change in policy. It is meant to give borrowers more time to complete their applications for income-driven repayment plans. The Department of Education will monitor how many borrowers use this option and determine whether it should be made available again in future years.
But if you have a private loan, nothing changes for you at this time — not your payment amount or your timeline.
If you have private student loans, your payment will not be affected by this pause and no changes to your repayment plan should take place. However, you should still contact your lender or servicer to see if they can make concessions for borrowers in distress. The government has previously taken steps to protect borrowers from unfair practices by lenders, so it is possible that a lender may agree to do something different than what was originally agreed upon in order to help alleviate the burden of these new policies on individual borrowers.
Even though private student loans aren’t required to follow the new guidelines, some companies may make accommodations.
Even though private student loans aren’t required to follow the new guidelines, some companies may make accommodations. That said, you should be aware that not all lenders will do this; while it’s difficult to predict which lenders will decide to pause payments and which won’t, there are a few factors that can help you gauge your chances of getting a loan freeze.
One thing you should know is that some lenders offer better deals than others when it comes to their repayment plans and benefits offered in general. If you have an excellent credit history or an existing relationship with one of these providers, then there’s a good chance they’ll offer you concessions—and if they don’t put up much resistance at all, then they’re likely more likely to comply with other requests too!
It’s helpful to know whether or not you are eligible for the student loan pause.
If you’re considering whether or not to take advantage of the student loan pause, it’s helpful to know whether or not you are eligible for this temporary measure.
The pause is a temporary delay in your federal student loan payments and will last for 6 months. This means that those affected by unemployment have time to look for work without having to worry about their student loans going into default during the job hunt.
The pause only applies to federal student loans; if you have private loans, unfortunately, they aren’t included in this program.
Conclusion
If you are a federal student loan borrower who has been affected by the coronavirus and want more information about how to get your loans paused, check out this resource from the Department of Education.