The Covid-19 pandemic has impacted every aspect of American life. For students in institutions of higher education, getting relief from student loan debt is a pressing matter. If you’re one of the millions of students who have lost their job or are earning less because of the pandemic, securing loan relief is a dire necessity. Here’s the good news: it is now possible to get payment relief.
Federal Education Loans (FFEL, Stafford and Perkins Loans)
The Coronavirus Aid, Relief, and Economic Security (Cares) Act effectively provides debt relief for most students on federal loans. Questions on procedure and process should be directed to the US Department of Education. The current program has put all payments on hold. That hold remains in effect until January 31, 2022. Beyond that, it is unknown if the program will remain in effect or amended. For now, it is a good idea to have all loan relief paperwork filed in the event a hold on payments is extended. As of now, the following loan relief programs remain in effect.
- Borrowers with loans owned by the US Department of Education or through the Federal Family Education Loan (FFEL) Program automatically receive an interest rate of 0% from March 13, 2020, through Jan. 31, 2022.
- If you are behind on Federal Student Loan payments, your wages, tax refund, and Social Security payments cannot be garnished.
- Borrowers who need relief on private student loans—or commercial student loans—may be eligible, but it isn’t as straightforward.
- During this pandemic-related forbearance, debt collectors may not collect payments on federal student loans.
- No student loan payments on federal loans are owed until after Jan 31, 2022.
What about private loans?
Call Your Lender
The safest way to get accurate information on what loan relief options are available is to speak directly with your lender. If you have good credit, you may be able to get a lower interest rate. 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; unlike current federal loan forbearance, interest will continue to accrue. Some lenders offer additional relief options, including short-term emergency forbearance or deferment. Others are waiving or refunding fees for late payments. When in doubt, contact your lender to discuss options that are available.
Financial Guidance at Hoverson Law
The Hoverson Law Firm has been helping clients with financial problems for 30 years. If you have questions about the complex issue of student loan relief, we can help. Call us now at (612) 349-2728.