How to Get Student Loan Relief During the Coronavirus and Beyond

The feds, states and even private lenders are offering relief for student loan borrowers.

Ryan Lane, Anna HelhoskiJuly 29, 2020
How to Get Student Loan Relief Now

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Lost wages due to the new coronavirus and the disease it causes, COVID-19, may affect your ability to manage and repay student loans. The federal government, states, private lenders and others are offering student loan relief to help you manage the economic fallout.

Here are the current options you have for student loan relief. As new programs are introduced, this page will be updated with additional information.

Federal student loan relief

The federal government is offering options for borrowers who need help with their student loans. The following measures last until Sept. 30 and are retroactive to March 13:

  • Automatic forbearance to all federal loan borrowers.

  • Automatically waiving interest on federally held student loans.

  • Stopping all collection activities on federal student loans in default.

Here’s more information about these programs, as well as existing repayment options student loan borrowers can take advantage of for payment relief.

All loans from the federal direct loan program, including subsidized, unsubsidized and PLUS loans, qualify for the government's student loan relief options. Most borrowers have direct loans.

Perkins loans and loans from the Federal Family Education Loan program may qualify, if they're held by the government. Look at the loan holder in your studentaid.gov account. If the Department of Education is listed, you will receive these benefits.

If the federal government does not currently hold your loan, you can consolidate them at studentaid.gov to qualify for relief. But consolidation will cost you benefits tied to your existing loans, such as Perkins loan forgiveness.

Payment postponements

Borrowers with federally held student loans will automatically receive a six-month forbearance, retroactive to March 13. No payments will be due during this break. Additionally, no interest will accrue, which is typically not the case with forbearance.

All auto-debit payments will be automatically suspended. But you may want to cancel your auto-pay via your servicer's website to ensure money isn't taken before the waiver is implemented. You can request a refund if this happens.

This forbearance is automatic, but you can still make payments of any amount over the next six months if you want to reduce your balance. Or use the pause to prioritize other money moves, such as starting an emergency fund or paying down high-interest debt, since your student loan balance won’t increase during this break.

Due to the forbearance, your repayment term may be extended so your final payment date will be six months later than you originally thought.

If you're entering repayment for the first time, there may be some overlap with your grace period. Usually interest on unsubsidized direct loans continues to build during the grace period, but if your grace period overlaps with the administrative forbearance, interest will not accrue during those months.

This administrative forbearance supersedes all other deferments or forbearances. If your prior forbearance or deferment's original end date was after Sept. 30, 2020, it will be reinstated beginning Oct. 1, 2020.

Interest waiver

The interest rate on federal student loans is set to 0% for six months, retroactive to March 13. During this time, no new interest will accrue on federally held student loans.

If you repay loans during this period, your entire payment will go toward your principal balance, provided you have no other outstanding interest or fees on the loans. This will save you money overall, though your actual payment amount won’t change.

Collection activities

The federal government has ceased all collection activities on federal student loans until Sept. 30. These activities include wage and Social Security garnishment, tax refund seizure and collection calls and letters.

This policy is retroactive to March 13, meaning you'll receive a refund for any forced student loan payments since that date. But if your 2019 refund was seized before March 13, it is not required to be returned.

If you're currently rehabilitating defaulted loans, the six automatically postponed payments will count toward the nine you need to complete this process.

Stimulus checks won't be taken due to defaulted student loans.

Alternate repayment plans

Federal student loan borrowers can choose from a number of different repayment options. If you’ll be unable to afford your student loan payments in the long term, enrolling in an income-driven repayment plan is typically your best option.

These plans base your monthly bills on your current income and family size. Payments can be as little as $0.

If you already use an income-driven plan and your financial situation has changed, you can request a new payment amount. If you were supposed to recertify your plan before Sept. 30, you'll now have an additional six months to do so. IDR recertification dates have been extended six months from borrowers’ original recertification date. Borrowers will be notified when it is time to recertify.

You should still use the time during the government’s payment suspension to complete your enrollment paperwork or provide updated financial information. That way, your new payment will hopefully be in place once your forbearance ends.

Student loan forgiveness

Be extra wary of any company that reaches out with an offer to forgive your loans; it's likely a scam.

Government and nonprofit employees pursuing PSLF do not need to keep making payments during the waiver period.

Existing student loan forgiveness programs such as Public Service Loan Forgiveness, or PSLF, are still available.

Government and nonprofit employees pursuing PSLF do not need to keep making payments during the waiver period. Those months will still count toward the 120 payments needed to qualify for PSLF — provided you meet the program's other eligibility requirements. For example, if you don't work full-time for an eligible employer during those months, your waived payments won't count toward forgiveness.

But if you remain steadily employed in a qualifying job, don't make your payments until October. Your money has better uses until then, even if it's just building emergency funds.

For borrowers already enrolled in an income-driven repayment plan, all suspended payments during this time will count toward IDR forgiveness.

How to work with your servicer

You do not need to contact your servicer to receive the payment postponement or interest waiver. If your online account does not reflect the appropriate changes, rest assured that they will be made retroactive to March 13. A lag is to be expected; avoid some frustration and don't wait on hold to ask your servicer about it.

If you wish to continue making payments during the waiver period, contact your servicer for instructions.

Private student loan relief

Private lenders typically offer opportunities to pause payments for up to 12 months or longer with forbearance or deferment policies. These policies vary from lender to lender and, unlike current federal loan forbearance, interest will continue to accrue.

But some lenders are offering additional relief options, including additional short-term emergency forbearance or deferment. Others are waiving or refunding fees for late payments.

When in doubt, contact your lender to find out what options are available.

Student loan refinancing

Student loan refinancing rates are currently low due to the economic climate. If you already have private student loans, strong credit and steady income, see if you can save money — monthly or overall — by qualifying for a lower interest rate.

If you have federal student loans, think hard about whether the savings from refinancing are worth it to you. You’ll lose existing federal loan benefits, such as access to interest-free forbearance and income-driven plans — as well as any new relief programs the government offers in response to the pandemic.

Relief efforts in your state

Multiple states have partnered with specific student loan servicers to offer a 90-day forbearance for commercially held federal loans and private student loans. Unlike the payment suspension in the CARES Act, interest will accrue during this break and you must contact your servicer to request it.

If your servicer is participating, relief is available in the following states:

  • California.

  • Colorado.

  • Connecticut.

  • Illinois.

  • Massachusetts.

  • New Jersey.

  • Vermont.

  • Virginia.

  • Washington.

As part of this multi-state agreement, servicers have also agreed to temporarily waive late payment fees, stop negative credit reporting and pause debt collection lawsuits.

New York has made similar relief available to its residents through a separate agreement; the state has also temporarily stopped collections on student loans referred to its attorney general’s office.

Relief efforts at your school

With students no longer attending classes in person, colleges are taking two main actions:

  • Continuing to keep housing open for its most vulnerable population, including homeless and international students. At University of Washington in Seattle, for example, residence halls are remaining open for students who need to stay on campus, but only in dorms with private bathrooms to encourage social distancing. At Purchase College, State University of New York — located in one of the hardest-hit counties in New York — classes moved online, but certain groups of students are allowed to stay. This includes those without anywhere else to go, as well as international students and students without technology needed to complete online courses.

  • Offering refunds on housing and fees to students. The University System of Georgia is issuing refunds at a percentage of the semester’s cost for housing, dining and certain fees, as well as study abroad. At Binghamton University, State University of New York, charges for housing, meal plan and on-campus fees are prorated once a student leaves campus. Students receive a credit balance automatically applied toward the fall semester unless a student requests a refund.

  • Distributing emergency financial aid and cash grants.The Department of Education is distributing $6.28 billion in funds for emergency cash grants to colleges to distribute to students who need funds. The grant money can be used for technology, food, housing, health care, childcare and any course materials. Colleges are still determining how best to distribute grant funds, but your financial aid office will likely have the most up-to-date information. Schools may have their own well of emergency financial aid resources available for students in addition to the emergency cash grant fund.

If your college moves to online learning or has already done so, call the school’s financial aid office to inquire about its refund policy. If you have no other suitable housing options, contact your college’s housing office to inquire about options for staying on campus.

Tax breaks for employer loan contributions

The stimulus bill amended the tax code so you won't pay taxes on student loan contributions from your employer through January 1, 2021. Previously, this money was treated as taxable income.

This change won't offer relief from your student loans, as employer contributions are on top of what you pay. But it may incentivize more companies to offer this benefit — they now get a tax break, too — or to increase their payments.

These programs often top out around $1,200 annually. But this tax benefit covers amounts up to $5,250. That total is for all education assistance an employer provides, including tuition reimbursement programs.

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