How to Get Student Loan Relief During COVID-19
Updated On November 2, 2021
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
Coronavirus has had a major impact on your student loans, including student loan repayment. The good news is that the federal government and private lenders offer student loan relief to help you through the Covid-19 pandemic.
Here are some options for student loan relief:
Federal Student Loans: Student Loan Relief
In March, Congress passed the Cares Act, a $2.2 trillion financial stimulus bill, that provided economic support, including for federal student loans:
- Pause federal student loan payments
- Waive interest on federal student loans
- Halt collection of student loans in default
Importantly, this student loan relief is temporary in response to Coronavirus. Under the Cares Act, student loan relief lasted from March through September 30, 2020. However, President Donald Trump extended this student loan relief through December 31, 2020. Effectively, this means that you are not required to make federal student loan payments during this period. That said, you can still pay your federal student loans in the normal course. Further, no new interest accrues on your student loans. Finally, if you are in student loan default, your income tax refund, Social Security payment or wages cannot be garnished or seized to pay off student loans. This period may be a good time for you to get out of student loan default.
Does student loan relief include all federal student loans?
This student loan relief does not include all federal student loans. The Cares Act specified that only federal student loans owned by the U.S. Department of Education are covered. This means that Direct Loans are covered, but FFELP Loans or Perkins Loans do not. Why? FFELP loans are federal student loans that were issued by private financial institutions such as banks and are typically owned by the federal government. Similarly, Perkins Loans are owned by colleges and universities. Therefore, if you have FFELP Loans or Perkins Loans, they are not covered under this student loan relief.
Is student loan forbearance automatic?
Yes, student loan forbearance due to Coronavirus is automatic. Therefore, you don’t need to register for this temporary student loan relief.
Can I still make student loan payments during Coronavirus?
Yes, you can still make student loan payments during Coronavirus. Even if your federal student loans are in temporary forbearance, you can make student loan payments as often and as much as you would like. Since no interest accrues on your federal student loans, it’s possible to pay off student loans faster because more of your student loan payment can reduce your principal balance.
Who do I contact if I have questions about student loan forbearance?
Contact your student loan servicer, which is the company where you send student loan payments. Your student loan servicer can answer your questions and discuss alternative options, including income-driven repayment plans. You also can contact Federal Student Aid, which is part of the U.S. Department of Education.
Private Student Loans: Student Loan Relief
While the Cares Act only applies to federal student loans, many private lenders are offering student loan forbearance that is similar to federal student loan relief. For example, some private lenders will postpone student loan payments for up to 12 months.
However, unlike federal student loans, interest will still accrue on your private student loans during this period. Other lenders offer student loan relief on a case-by-case basis.
Contact your lender to learn more about potential student loan relief options.
Student Loan Refinancing
Should I refinance student loans during Coronavirus? It’s a popular question that student loan borrowers ask.
Student loan refinancing is another option during Coronavirus. Student loan refinancing helps you save money, get a lower interest rate and pay off student loans faster. You can refinance private student loans, federal student loans or both.
Should you refinance federal student loans during Coronavirus?
The choice to refinance student loans is unique to your personal goals and circumstances. Since federal student loans are paused temporarily, some borrowers prefer to benefit from student loan forbearance and refinance private student loans only. Other borrowers, however, recognize that student loan forbearance is temporary, and don’t want to pay their regular interest rate when student loan relief ends. Therefore, these borrowers prefer to refinance both their federal and private student loans to lock-in a lower interest rate.
Student Loan Relief: States
Several states have entered into agreements with certain student loan servicers to provide student loan relief separate from the Cares Act. This is a 90-day forbearance that applies to private student loans and commercially-held federal student loans such as FFELP Loans, for example. This forbearance is not automatic, so you must contact your student loan servicer to request this forbearance. Some student loan servicers have waived late fees and are not making negative credit reports to credit bureaus during this period. Student loan relief may be available in states such as California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, New York, Vermont Virginia and Washington.
Contact your student loan servicer for more details.
Student Loan Forgiveness: Coronavirus
If you want to explore potential options to cancel student loan debt during Covid-19, there are options. Most student loan forgiveness programs apply to your federal student loans and are through the federal government. Your student loan servicer can provide more information on potential options. Student loan forgiveness is offered through income-driven repayment plans, the Public Service Loan Forgiveness program and Teacher Loan Forgiveness program, for example. That said, there is no immediate plan from Congress to cancel all student loan debt.
Final Perspective: Student Loan Relief
Your student loan servicer can help you with income-driven repayment plans, student loan payment questions and student loan forbearance, for example. Contact your student loan servicer to discuss potential options. Student loan refinancing is a separate process with individual lenders. During Coronavirus, it’s important to understand all your options so you can make an informed decision to manage and pay off student loans in the best way possible.