Temporary Federal Student Loan Relief | Part III
- On March 13, 2020, the President announced that interest would be waived on all federally held student loans.
PART III: Unable to Make Payments
Temporary Federal Student Loan Relief (COVID-19 Response)
What if my loan is already in forbearance?
If your loan is already in forbearance, it will stop accruing interest starting on March 13, 2020, for at least 60 days. However, when your loan goes back into repayment, any interest that accrued during the forbearance period before March 13, 2020, will capitalize, which means that any outstanding interest will be added to your principal balance.
My company has closed because of coronavirus/COVID-19. I'm not making any money and can't pay my student loan bill. Can I stop making payments until I'm working again?
If you're having trouble making payments, contact your loan servicer as soon as possible. If you have a Federal Perkins Loan, contact your school. You can easily avoid the consequences of delinquency or default by staying in touch with your servicer or school. Your servicer or school can provide information about deferment or forbearance options that allow you to stop making payments on your loans temporarily. You may also be able to change to a different repayment plan that would give you a lower monthly payment.
I'm currently on an income-driven repayment plan. I'm making a lot less money because of the coronavirus outbreak and don't know when my income will return to the same level. What can I do?
If you've had a significant change in income, you can ask to have your monthly payment recalculated at any time. Your loan servicer can provide more information.
I'm making payments and hoping to qualify for Public Service Loan Forgiveness (PSLF), but I can't work right now due to coronavirus. If I miss a payment, can I still qualify for PSLF?
If you don't make a payment for a month or enter a deferment or forbearance because you cannot afford your payment, that month will not count toward PSLF. However, qualifying payments do not need to be consecutive, so you will not lose credit for payments that you've already made. As a reminder, all borrowers seeking PSLF should enter an income-driven repayment plan, which bases monthly payments on income instead of on loan debt. If you believe that your work will be impacted for an extended period of time, you can re-certify for your repayment plan early, to take into consideration your drop in income. Of course, PSLF also requires you to be working full-time for a qualifying employer to receive credit toward PSLF for a month. If your employer does not consider you to be working full-time during this period, then this month or these months will not count toward PSLF even if you make a payment. However, paid sick leave or your employer may count other leave time as hours worked for PSLF. To learn more about PSLF, visit StudentAid.gov/publicservice. To learn more about income-driven repayment, visit StudentAid.gov/idr.
Article written by Cynthia Walker, MBA, of FINLIT, LLC. Contact FINLIT or follow them on Twitter and Facebook.