How the Coronavirus is Affecting Your Student Loans

By Victoria Robertson on April 28, 2020

In the wake of a pandemic, there are many day-to-day normalcies that have been turned upside down. For many, paying for basic amenities and food has become a stretch due to decreased job security, which creates a tense financial situation.

So, for those of you that are currently in school or have graduated and are curious as to the state of your student loans, you aren’t alone. There are many questions surrounding the state of loans in general, so the confusion is entirely normal.

For this reason, here are six ways in which the coronavirus is affecting your student loans.

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1. Federal Loans Suspension of Payments

First and foremost, the Department of Education has suspended payments on all federally allocated loans. This is to say that, from March through September 30, no payments are required on your federal loans.

Now, some of you may have already made past payments, and you can either opt to leave those payments or to request a refund (discussed below). In addition, no further payments are required until October of 2020, which is also subject to change.

2. Halting of Collection Efforts on Past Due Loans

In addition to the suspension of student loan payments, federal student loans that have been sent to collections will receive some reprieve, as there has been a mandated halt on those collection efforts.

This means that, prior to the Coronavirus pandemic, if your loan was sent to collections, you will not be contacted until after September 30 to pay your past-due payments. While that debt will still be there when this is over, this is a small window of breathing room for you to gather the finances necessary to pay back your debt.

3. Federal Loan 0f Interest

Additionally, federal student loans will not be collecting interest during the above-mentioned time period. This means that, even if you are not making payments during this window, you will not be accruing interest.

For many, this allows principal-only payments in which you don’t have to worry about paying down the monthly interest. For others, this simply means there isn’t a penalty to making zero payments until you’re financially able to again.

Either way, federal loans will not be accruing interest until October of this year, so enjoy that feeling while it lasts!

4. March Payment Refund

As previously mentioned, just because you’ve already made a payment in March of this year doesn’t mean that the money is unavailable to you. The Department of Education has enacted a retroactive plan to provide refunds to individuals in need of their March loan payments.

As stated above, from March through October, loan payments on the federal level are suspended, so you do have options available to you to retrieve that money. That being said, applying for a refund requires an application of administrative forbearance that will require a little more work on your end. Still, in the event that the money is make or break for you, this is certainly something to take advantage of.

5. Allowing Continued Payments

That all being said, many students are wondering if they can still make their monthly payments to their federal loans throughout these months. The simple answer? Yes.

Just because you aren’t accruing interest and payments aren’t mandated isn’t to say that you can’t make those payments. If you wish to continue making your monthly payments, especially in terms of benefiting from the zero interest component, you are more than welcome to do so.

Payments are not mandatory, but they are certainly voluntary, so continue in whichever manner makes you the most comfortable with your finances.

6. Private Loans Case by Case

Last, but certainly not least, many students are asking about whether or not the above-mentioned mandates are inclusive of private student loans. They are not.

Private student loans are an entirely separate entity, and therefore are not under the government umbrella of student loans. For this reason, if you have a private student loan, you will need to speak with your servicer regarding the options available to you.

If you’ve lost your job, you’re likely eligible for forbearance or other means of delaying your monthly payments. Otherwise, if you’re experiencing financial hardship, your servicer will best be equipped to provide you with the options available to your unique situation.

Financial stability is hard to come by during a pandemic, but that’s not to say that it’s impossible. At the forefront of everyone’s concern is the ability to not only pay bills, but to also understand what’s going on with monthly payments.

The above six ways that the coronavirus is affecting your student loans should be a good starting point in terms of learning how to properly manage your financial situation. Still, that being said, it’s important to look into your personal, financial situation to really assess the best financial move for you.

Stay safe and healthy everyone!

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