COVID-19 Student Loan Relief Options
With the COVID-19 pandemic, many student loan borrowers have been impacted by a loss of wages due to losing their jobs or being unable to find one. This may have affected your ability to make your payments or even attempt to pay back your loans. Many lenders — private, federal, and state — are offering many students like you, some relief to help you in managing the economic fallout.
Federal Student Loan Relief
These measures will last until December 31, 2020.
- There is automatic forbearance to all borrowers of federal loans. These are just loans held by the federal government and not private or state.
- All interest will be waived on any federal student loans.
- All collection activities on defaulted student loans will be halted.
Student loan forbearance will allow you to stop making payments for a temporary period. If you already had one in place, this current one supersedes your original one. What this means is that your prior forbearance or even deferment will be reinstated at the beginning of January 2021. Also, take note that if you have private loans, you won’t qualify, but consolidation may help give some form of relief. Check with your loan lender as some do, however, offer up to 12 months of relief with forbearance or deferments.
State Relief Efforts and Private Loan Relief
Many states have worked with specific loan providers that offer a 90-day forbearance for any commercially help student loans. This also includes private student loans as well. Unlike the Cares Act, you’ll still accrue interest and must make contact with your provider to request this forbearance. These states are:
- California
- Colorado
- Connecticut
- Illinois
- Massachusetts
- New Jersey
- Vermont
- Virginia
- Washington
It’s best to check with your servicing institution to see if you do qualify for a temporary waive of late payment fees, a stop to adverse credit reporting, and even a pause in debt-collection lawsuits. These may be great options if you’re a student or recent graduate and in need of extra time right after college for your job search. Many of these programs will help with your debt relief as COVID-19 continues to plague the economy.
Income-Driven Repayment Plans for Federal Student Loans
There is also have the option to apply for an income-driven repayment plan. This can make your payments more affordable and give you more time to pay off your student loans as these types of payment plans are based on your income. Your amounts will range from 10-15% f your discretionary income but never more than what you would pay under the current 10-year standard repayment plan.
Learning about your options
Finding student loan relief is challenging and can add extra stress to your life. Fortunately, there are ways to make lower payments or defer or forbear your loans while you get your finances in order. Applying for any of these programs is done relatively quickly, so you won’t have spent days filling out paperwork. While COVID-19 continues to spread, there is some relief when it comes to your student loans.