Your questions about student loans and the coronavirus answered
Let’s answer your most common questions about student loans and Coronavirus.
Here’s what you need to know.
Even if you followed all the latest headlines on your student loans and the coronavirus, you may still have questions. Here are the most common questions as well as the answers and the procedure to follow.
1. How does the CARES law affect my student loans?
There are several changes, but here are the most important:
2. When do these benefits start and end?
March 13, 2020 to September 30, 2020. This means that these changes are retroactive to March 13. Therefore, if you student loan payments after March 13, 2020, you can contact your student loan manager for reimbursement.
3. Is the suspension of federal student loan payments automatic?
Yes. You have nothing to do. Your student loan manager will automatically set your federal student loans at a 0% interest rate. In addition, you will not be billed monthly for eligible student loan repayments during this period.
4. Can I still make federal student loan payments if I want to?
Yes. The suspension of the payment of the federal student loan is optional. Therefore, you can still make a federal student loan payment if you want to. During this period, you will not be penalized for paying less than your usual monthly payment. If there is no student loan interest, how will your monthly payments be applied? Answer: Your payment will first be used to repay interest accrued before March 13, 2020, and then settle your principal balance.
5. Which federal student loans qualify for a 0% interest rate?
Only federal student loans held by the federal government are eligible. This includes:
- Direct loans in default and not in default
- FFEL program loans in default and not in default
- Federal Perkins Loans
6. How do I know if my federal student loans qualify?
Contact your student loan manager to check what student loans you have. Remember, Federal Family Education Loans (FFEL) and Perkins Loans are not eligible. Why? FFEL program loans were issued by banks, not the government. Perkins loans are owned by colleges and universities. The good news is that you may be able to consolidate your FFEL or Perkins loans into a direct consolidation loan to qualify for these federal student loan benefits.
7. Can I stop paying my private student loans?
No. The CARES Act only applies to federal student loans. However, there is several steps you can take to get financial relief for your private student loans. You can also refinance student loans, since interest rates are insanely low right now.
8. If I don’t make any federal student loan repayments, how will that affect income-tested repayment plans or civil service loan cancellations?
If you don’t make any federal student loan payments, the Department of Education will still “count” the non-payments as if you made them. For income-based repayment, they will be factored into the required 20-25 years of monthly payments. For the cancellation of public service loans, they will be taken into account in the 120 monthly payments required. However, you must have direct loans, be enrolled in a qualifying repayment plan prior to the suspension, and be working full-time for an eligible employer during the suspension period.
9. Can I get a refund for any payment I made after March 13, 2020?
Yes. Contact your loan manager to request the repayment of your student loan.
10. My income has changed because of the coronavirus. What do I do?
Contact your loan manager to explore the options. For example, you can sign up for an income-based repayment plan through StudentAid.gov/idr. If you have already registered, now is the right time to recalculate your monthly payment based on your new income. After September 30, 2020, your income-based repayment plan will be revised to the new payment amount (since you are not required to make a federal student loan repayment before that date).
Useful resources: what to do with your student loans
More options for your student loans
What else can you do to pay off your student loans faster and save money during this tough time? Here are four options, all free: