15 Most Popular Questions About Student Loans And Coronavirus
It’s time to answer your most pressing questions about student loans and the Coronavirus.
Here’s what you need to know.
Student Loans: Q&A
1. What are the major changes in the CARES Act for my student loans?
Among other benefits, the CARES Act provides through September 30, 2020:
2. How long will my student loan payments be suspended?
Payments for your federal student loans (not private student loans) will be suspended through September 30, 2020.
3. Who is paying my student loans during this time?
No one is paying your federal student loans during this suspension. The interest rates on your federal student loans temporarily has been set to 0%, so no new interest will accrue on your federal student loans during this period. When the temporary suspension ends, you’ll still be responsible to pay your student loan balance.
4. Can I pay my federal student loans if I want to?
Yes. The suspension is automatic, but it’s not mandatory. If you want to keep paying your federal student loans, you can.
5. If my interest rate is 0% during this period, will my federal student loan payment amount change?
No, unfortunately. If you choose to pay your federal student loans during this time, your monthly payment does not change. Each student loan payment will pay off any previously accrued interest first and then will reduce your principal balance.
6. Does the CARES Act include any student loan forgiveness?
There is no direct student loan forgiveness in the CARES Act.
7. Do these changes apply to public service loan forgiveness?
Yes. You can pause your federal student loan payments and they will still be “counted” toward the required 120 monthly payments for public service loan forgiveness. Many websites are currently showing inaccurate information about public service loan forgiveness and pausing monthly payments based on an earlier rule prior to the CARES Act. If you contact your student loan servicer and are told differently, it’s certainly frustrating. However, the corrected information will be available on the websites of student loan servicers and the Department of Education soon. This new change even has a “secret” way to get more student loan forgiveness. You can also read the CARES Act to make your own determination.
8. If I pause payments, will this impact my income-driven repayment plan?
As with public service loan forgiveness, if you pause payments, your non-payments will be counted toward the 20 or 25 years of required monthly payments to receive federal student loan forgiveness through an income-driven repayment plan.
9. What relief is offered for private student loans?
The CARES Act applies to federal student loans (not private student loans) such as Direct Loans that are owned by the federal government. The CARES Act does allow employers to help pay your student loans up to $5,250 this year tax-free. If you’re struggling financially to pay private student loans, contact your lender or private student loan servicer to discuss potential options.
10. If I pause my student loan payments, should I turn off autopay?
You can check with your student loan servicer regarding this policy. To be safe, you can turn off autopay for your federal student loans (not private student loans) – so long as you remember to turn on autopay once the temporary suspension ends.
11. Are all federal student loan payments suspended?
No, the suspension of federal student loan payments only applies to student loans owned by the federal government. While that includes most federal student loans such as Direct Loans, it does not include some Federal Family Education Loans (FFEL) and Perkins Loans. You can contact your student loan servicer to check if all your federal student loans qualify. You also may be able to consolidate your FFEL Loans into a Direct Consolidation Loan to qualify.
12. If I need to leave work due to Coronavirus, are there any benefits?
President Donald Trump announced a paid sick leave plan if you are impacted by Coronavirus, and also discussed how to qualify for paid sick leave.
13. Do I need to apply to suspend my federal student loan payments?
No, it’s automatic. Your federal student loan servicer will suspend federal student loan payments for you. Similarly, your interest rate has been automatically set to 0%. If you have defaulted on your student loans, garnishment of wages, Social Security benefits and tax refunds also has automatically stopped.
14. My income has changed. Can I lower my student loan payment?
Consider an income-driven repayment plan for your federal student loans. If you already have one, then contact your federal student loan servicer to recalculate your income so you can find the best income-driven repayment plan for your needs.
15. Should I refinance my student loans now?
If you want to save money on your student loans and get a lower interest rate, then now is an excellent time to refinance student loans. Student loan refinancing rates are incredibly cheap now due to multiple interest rate cuts. So, now is a good time to lock in a low rate, even if you have refinanced before. If you lost your job or are unsure of your financial situation, then you may not want to refinance your federal student loans to receive the benefits of the CARES Act and other financial protections such as income-driven repayment and forbearance. Remember, however, that the CARES Act is only temporary and does not lower your student loan balance or permanently lower your interest rate. To get approved for refinancing, you’ll need a credit score of at least 650, be employed and have enough recurring monthly income to pay for your monthly debt payments and living expenses.
Options For Your Student Loans
What else can you do to pay off your student loans more quickly and save money during this challenging period? Here are four options, all of which have no fees: