Student Debt Relief
Our world has been interrupted by the global pandemic that is COVID-19 and for most individuals this is an extremely challenging, anxiety provoking time. There’s no doubt that even for people who are in good health, coronavirus has had a significant impact on nearly every way of life.
In addition to the fear of becoming infected with this vicious virus, the quarantine and social distancing practices have interrupted our entire society. Whether it’s schools moving to online learning or small businesses, restaurants and shopping malls being closed, COVID-19 is changing our way of life.
These closures in businesses have had a direct impact on our economy in more ways than one. For most people businesses closing temporarily has resulted in unemployment or loss of working hours. This has made monthly bills tough and sometimes impossible.
When there are bills to be paid, how are we supposed to be expected to pay off our student debt and other outstanding loans?
How The Novel Coronavirus is Affecting Student Loans
Coronavirus is affecting student loans in more ways than one. First, it’s important to know the legislation that is now in place as a result of the pandemic.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act has suspended principal and interest payments on any federal student loans held by the U.S. Department of Education (ED) until September 30, 2020.
This is incredible news for anyone who has been financially impacted by COVID-19 because no payments have to be made on your student loans until the 1st of November. Not only do you not have to make payments, but you don’t have to apply or ask for this extension in any way.
Federal student loans held by the ED are automatically suspended so there’s no need to reach out to anyone to begin the process. Additionally, interest will not continue to build on these loans through this period of time. In other words, your federally held student loans are now no interest loans until September 30, 2020.
This is a huge win because as most of us know, no interest loans are hard to come by and are nearly unheard of in the student loan world.
If you don’t have federal held student loans by the ED, but rather private student loans, you should check with your provider to see if they have reduced or postponed payment options, like forbearance. They are not obligated to follow the legislation in place for federal student loans, but may be following suit and doing so.
What is a Student Loan Forbearance
The term student loan forbearance has been thrown around in the news, especially during the coronavirus pandemic. But what is a student loan forbearance? And how do you get a student loan forbearance?
A forbearance is a reduction or postponement of student loan payments. Forbearances are sometimes granted when a person is unable to pay because of a difficult financial situation, however it’s up to the institution that you have the loan with. Federally held student loans give you the ability to apply for forbearance for up to 12 months at a time.
The request can either be granted or denied based on your application, but once it has been granted you may not have to pay your student loans for 12 months. Privately held student loans are different depending on the program.
Some offer the option of forbearance for shorter periods of time and others may charge you a fee up front in order to not have to pay for an extended period.
If you’re still questioning how to get a student loan forbearance, remember that any federally held loan by the ED has already been suspended. If you have student loans held by a commercial lender or private institution, contact them immediately and begin the process of applying for a student loan forbearance.
How to File for a Forbearance
Filing for a forbearance is different from normal procedures given the current economic situation. Student loans can be held from a variety of lenders or can be federally held, so it’s important that above all things you double check with whatever institution your student loans are held. We’ve outlined the guidelines for a few of the big providers who hold many of the student loans in the U.S.:
Nelnet Coronavirus Forbearance:
Nelnet has decided to follow the ED and is complying to the CARES Act for only federal student loans. Anyone with student loans in the Federal Direct Loan Program (FDLP) and the Federal Family Education Loan Program (FFELP) that are held by the ED will automatically have their payments suspended until September 30, 2020.
You should double check that you qualify under those specific programs if you have loans with Nelnet because they must be held by the ED. If you do, no further action needs to be taken and Nelnet forbearance is in action, as your payments are already suspended with no interest for the next six months. If your loans are not held by the ED, Nelnet suggests looking into other options to defer, including ‘Economic Hardship’ or an ‘Unemployment Deferment’.
Additionally, you can apply for a coronavirus forbearance to suspend payments for 90 days.
Navient Coronavirus Forbearance:
Similar to Nelnet, Navient’s forbearance will follow the CARES Act for any ED owned loans. If you have loans owned by the ED through Navient, Navient has stated that they are “working to suspend payments…by April 10, 2020…”
If you are part of the FFELP, Naviet is offering up to three months of forbearance if you qualify and you must apply in order to qualify for disaster forbearance. If your loans aren’t owned by the ED, Navient is working with customers to help them reduce or postpone payments.
They suggest logging into your Navient account and going to the ‘Repayment Options’ section to discover different options.
AES Coronavirus Forbearance:
American Education Services (AES) has not made any statements specifically about a coronavirus forbearance, however, they do offer deferments and forbearances to qualifying customers.
Unfortunately, these are not interest free and are temporary, but it is possible that these may change given the circumstances.
Logging into your account and contacting a customer service representative may be the best way to determine what’s right for you in the given situation.
Interest on Loans Paused Due to Coronavirus
In addition to not having to pay your loans held by the ED for six months, one of the best parts about the CARES Act is that your student loans are essentially no interest loans. Part of the act is an interest waiver that waives all interest on student loans until September 30, 2020.
There’s no need to apply to get the no interest student loan. If you qualify under the CARES Act, you automatically qualify for no interest and the payment pause. It is highly recommended that you login to your account to ensure that your student loans have been paused and are no longer accruing interest.