The coronavirus pandemic has caused many people across the U.S. to lose a reliable source of income. Fortunately, there are still policies designed to help people financially weather the crisis, including programs that can help borrowers suspend student loan payments. If you’re concerned about making your next payment on a federal or private student loan, read on to see your options.
What has happened with student loan repayment during the coronavirus pandemic?
Student loans were one of the first areas to be addressed when the pandemic hit. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law March 27 and worth roughly $2 trillion overall, allowed borrowers to suspend payments on federal student loans for six months, through Sept. 30, 2020, and automatically waived interest during this time frame. Additionally, the Department of Education suspended collection attempts and wage garnishments, Social Security offsets and tax refund seizures on defaulted federal student loans.
On Aug. 8, 2020, President Trump issued an executive order extending many of the protections for borrowers of student loans. Through Dec. 31, 2020, federal student loan payments continue to be suspended, collections are stopped and interest is waived. While the 2020 election has caused many to speculate about an extension of this relief, there is currently no extension planned.
Federal student loans
All student loans that are owned by the U.S. Department of Education are currently eligible for suspension of required payments and waiver of interest. Additionally, all collection attempts and wage garnishments have been suspended. Keep in mind that just because you no longer are required to make a payment, it still may make sense to continue to pay in order to shorten the time you have an outstanding student loan balance.
For the latest information, check out the coronavirus information page on the Federal Student Aid website.
Private student loans
Private student loans, Federal Family Education Loan (FFEL) Program loans owned by commercial lenders and Perkins Loans held by your school are not eligible for these benefits. If you have a private student loan, your payments and interest will not automatically be waived. You will need to continue making your payments on time or contact your loan servicer about hardship options.
However, many private lenders have programs in place to help people who have been impacted by the coronavirus crisis. These programs may include temporary forbearance, deferment or adjusted repayment plans.
How to find loan relief for private student loans
Help for federal student loan borrowers is automatic, so you won’t need to contact your servicer about postponing payments and waiving interest unless you have questions. But every private lender and loan servicer is offering different relief options. Here’s how you can request help:
Call your loan servicer. Below, we’ve listed 10 private lenders and loan servicers and how to reach them, but the list is not comprehensive. When you call or email your loan servicer, explain your financial situation and how you’ve been impacted by this crisis. For example, you or your partner may have been laid off or furloughed, or you might have concerns about your future ability to make your student loan payments. Tell your lender when you anticipate being able to resume loan payments.
Ask about assistance programs. Your options will depend on the servicer and your individual situation. For example, your loan servicer may offer to suspend payments for a few months, temporarily lower your interest rate or offer interest-only payments. Some servicers are treating each situation on a case-by-case basis.
Ask questions. Before agreeing to start the program, confirm the exact terms, such as fees involved, how long the relief lasts and whether interest accrues. You also should find out whether that accrued interest “capitalizes,” which means it’s added to the unpaid principal balance. Create a plan for how you’ll resume payments at the end of the forbearance period.
Enroll in your loan servicer’s program. Ask for the details in writing and complete the process to enroll in your loan servicer’s program. Make sure that you receive confirmation that you’ve been enrolled.
Consider refinancing. As interest rates drop, it’s getting cheaper to refinance private student loans. Shop around for the best rate if you’re considering this move. Refinancing can help you save a substantial amount of money if you can shave a percentage point or two off your current interest rate. It can also help if the new lender offers more flexible hardship options than your current lender.
Keep in mind that enrolling in plans that suspend or lower payments ultimately extends the life of the loan, which costs you more in interest overall. If you can afford to keep making payments as scheduled, it may be in your best interest to do so.
Private student loan lenders offering relief
Below is a list of private lenders that are offering some kind of relief to borrowers as of Nov. 19, 2020. If your lender is not listed here, we recommend checking your lender’s website or reaching out by phone.
Citizens Bank says that private student loan borrowers who are experiencing financial hardship may qualify for payment assistance for up to 90 days and late fee waivers. Interested borrowers can call the bank at 1-866-259-3767 or reach out to their loan servicer.
College Ave says that borrowers may be eligible for its Disaster Forbearance program. To see if you apply, call College Ave at 844-803-0736. It is not able to process requests via email or chat.
CommonBond borrowers can apply for natural disaster forbearance, which won’t count toward standard forbearance limits. The online lender is waiving late fees and allowing private student loan borrowers to postpone payments through the end of the national emergency declaration. Loans will continue accruing interest, but you won’t pay fees to join the program.
Discover private student loan borrowers can call the bank at 800-223-5614 to discuss hardship options.
Earnest borrowers can apply for a short-term forbearance program. You can reach out via Earnest’s email portal or call 888-601-2801. Entering this program makes your eligible loans current and also postpones payments for one full month. When you contact the company, provide details of how you have been financially impacted, the industry you (or other household members) work in and an idea of when you can resume payments on your loan. Interest accrues while your payments are postponed, but it won’t be capitalized at the end of forbearance.
Laurel Road private student loan borrowers who are financially impacted by the coronavirus may be eligible for a forbearance of three payments. To see if you are eligible, reach out to MOHELA, which services Laurel Road’s loans. Call 877-292-6845 to discuss hardship relief options, including forbearance or an extension. Interest during a forbearance will continue to accrue, and your monthly payment will be recalculated at the end of the forbearance.
LendKey, which partners with banks and credit unions to help borrowers refinance student loans, says that borrowers can reach out via email at firstname.lastname@example.org. You may also call your loan servicer with questions and to discuss hardship options.
Navient, which services federal and private student loans, says that qualified borrowers may be eligible for its short-term forbearance program. To see if you are eligible, contact Navient at 888-272-5543. Interest will accrue but won’t be capitalized at the end of the forbearance period. Navient also offers other hardship options to private loan borrowers, including a rate-reduction program, interest-only payments and an extended repayment plan.
Sallie Mae borrowers can chat with the lender about private student loans online or by calling 833-558-6577 to see what assistance options may make sense for them.
SoFi borrowers can apply for a 60-day forbearance during the coronavirus pandemic, with the option to extend for an additional 30 days.
The bottom line
While federal student loans continue to have loan payments suspended, collections stopped and interest waived, many private student loan lenders are also providing options. If you are experiencing economic or other hardship due to the coronavirus crisis, know that you do have options.
Reach out to your student loan lender or servicer to see what options are available to you. Make sure that you fully understand what happens to any unpaid interest or principal, and get the terms in writing. And remember, even if you can take advantage of a forbearance program, it usually doesn’t make sense unless you need to. Going into forbearance will extend the length of your loan, and it may cause you to pay additional interest over the course of your loan.
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