With the coronavirus running rampant throughout the country, there have been a lot of concerns about paying student loans. The outbreak has caused the shutdown of nonessential businesses, resulting in a financial setback for many Americans, including students.
However, the U.S. government has taken measures to make paying student loans easier for students. Back in March, the government suspended all federal student loan payments and halted interest charges until September 30.
While this is a great relief for college students who have federal loans, there is no immediate relief for private student loans. Here are some tips for paying private student loans during the pandemic.
Apply For Forbearance
While there may be no governmental law requiring private loan lenders to offer loan forgiveness to struggling college students, a lot of these lenders are offering forbearance. Forbearance is the temporary suspension of loan payments for a certain amount of time.
Private lender College Ave is offering a Disaster Forbearance program that suspends payments for three consecutive months. CommonBond is a bit more flexible with their forbearance plan. Their natural disaster forbearance program suspends payments for the duration of the pandemic.
Keep in mind that while forbearance temporarily halts required payments, interest may still accrue during the time period.
Student Loan Refinancing
One way to lower your student loan payments is by refinancing your student loans. Student loan refinancing combines your existing student loans into a new private student loan with a lower interest rate.
To qualify for student loan refinancing, you must be employed, have a solid credit score, and have a recurring monthly income.
However, you can also apply with a qualified cosigner. A parent or a spouse who meets these criteria can not only help your chances of approval but a better interest rate.
Try a Direct Consolidation Loan
While private student loans such as Perkins are ineligible for federal benefits, your private loans can also be grouped into Direct Consolidation loans.
Direct consolidation makes you eligible for income-driven repayment (IDR) plans while allowing you to make single monthly payments. The only drawback of consolidation is that it may eliminate any progress made towards relief programs.
Consult Your Employer
Even though your boss may have graduated school years ago, they remember how difficult paying student loans can be. If you are working during this time, you should consider asking for help from the people who pay your bills.
Try talking to your human resources department, informing them that your private student loans don’t qualify for student loan suspension.
Part of the coronavirus relief package grants employers tax relief for contributing up to $5,250 to employees with student loans. The package is active until January 1, 2021, and can cover both federal and private loans.
Contact Your State Attorney
If for some reason you are having trouble getting relief from your private loan lender, call your state attorney general’s office. By doing so, your state can direct you straight to its department of banking, their consumer protection office, or student loan advocate. It is never a bad idea to go the extra mile to relieve your student loans/
Pay Extra Towards High-Interest Loans
This tip is perfect for borrowers who don’t qualify for student loan refinancing. List out all of the private loans you are currently paying off along with their interest rates and minimum monthly payments.
Then, pay more than the total minimum amount each month and distribute the extra amount to the loan with the highest interest rate. Following this tip will allow you to save more money on interest in the long run.
Paying student loans can be difficult, especially during times of an economic crisis. However, there are various ways you can pay off your student loans.
Using government assistance or even asking a family member for help can make a significant impact on your student loans. Picking up extra shifts if you are employed or budgeting the money you do have can also make paying student loans a bit easier during this time.
Just keep in mind that you are not the only experiencing financial setbacks during this period. Like all things in life, the economic crisis is temporary and will pass.