What COVID-19 Means for Your Student Loans



    With everything going on right now, the last thing people need to be worried about is how they'll be able to afford their student loans. Rent is seemingly due every two weeks, grocery stores have turned into The Hungry Games, and the coronavirus isn't showing any signs of slowing down anytime soon (please stay y'all asses in the crib).

    As a whole, Americans owe more than $1.6 trillion—yes, trillion with a T—in student loan debt. At this point, going a little bit longer without paying that won't hurt anything.


    This page will be updated on student loan happenings during this pandemic, and the resources and options available to you.


    Postponing Payments


    Thanks to the new stimulus package, you will be allowed to postpone your federal student loans from April 1st to September 30th. It will be a six-month forbearance, so no interest will accumulate during this time, but that doesn't change how much you owe. If you owed $20,000 before, you're going to owe $20,000 after those six months are up. That debt gon' be waiting for you like Bishop was Q by the locker in Juice.

    It might not take that stress off your shoulders completely, but it will postpone it. At this point, the focus should be on taking it one day at a time. Even if you're still working and receiving your normal pay during this time, consider using this forbearance to put that money towards other financial needs—like boosting your emergency fund (3–6 months of expenses) or paying down debts with high interest.

    It's not often that Uncle Sam 'nem give out breaks like this, so use it to your advantage. I can name 1,001 things off the top of my head that's more important than paying Sallie Mae right now; she'll be aight for the time being.

    If you want to get the six months forbearance, which begins in April, you don't have to do anything extra, but if you want to continue making payments during that time, you'll need to contact whoever is servicing your federal student loans.


    If you don't know who your loan servicer is, you're better than me because there's no way I'm sending out monthly payments to a company I don't even know. But, this is a judgment-free zone, so don't mind me. Head over to studentaid.gov to find out who your loan servicer is.

    Pause on Federal Interest


    Beginning in April, there will be a 0% interest rate on federal student loans. The intent is to help folks with some financial relief and put money back into their pockets, but it, unfortunately, won't quite work like that. It's almost like you sinking in a flood from rain and somebody throwing you an umbrella.

    Yes, it helps not to be collecting interest during this time, but that doesn't mean your monthly payments will change; they're going to be the exact same. If you were paying $200 a month before, your bill will continue to be $200.


    The difference is that the money will only be going to your principal, theoretically helping you clear the debt faster. The problem is that you won't really see the benefits of this until the backend when your loans are paid off. You'll save money overall, but not right now.

    Collections


    Normally, once you're 270 days past due on your federal loan payments, you're considered in default. Not only does this do damage to your credit score, but Uncle Sam 'nem could also technically take the money from your tax return or wages.

    Luckily, the government has stopped all collection activities regarding federal student loans until further notice. No calls from annoying ass debt collectors, no unwarranted letters that get MJ fadeaway'd into the trash, no nothing.


    Student Loan Forgiveness


    If you're working toward Public Service Loan Forgiveness (PSLF), the time your student loans spend in forbearance counts toward your PSLF. If you choose to use all six months, it'll be as if you made six qualifying payments.


    Here's how to qualify for PSLF:


    • Be a federal, state, or local government employee

    • Work for a non-profit

    • Work full-time

    • Have Direct Loans

    • Be in an income-driven repayment plan

    • Make 120 qualifying payments


    A qualifying payment is a payment you make in-full, no later than 15 days after your due date, while employed full-time by a qualifying employer. If you're not working full-time for an eligible employer during forbearance, it's slow for those six months counting toward your 120 needed qualifying payments.


    Switching Payment Plans


    Even if you decide to take the six months forbearance, you should consider all repayment plan options. If you've lost your job or had your hours cut, look into income-driven repayment plans that base your monthly payment on your current income and family size.

    Depending on your situation, your payments could be as low as $0 each month. If you can't afford that, holla at me. I'll be a good upstanding gentleman and handle that for you. *Insert the arm flex emoji all the hood dudes be using on Facebook*


    If you're delaying your student loans, complete the enrollment to switch payment plans during this time. That way, once your forbearance is up, your new plan will already be put into place, and you can hit the ground running. You can do it directly from your loan provider's website.

    Private Student Loans


    Unfortunately, the majority of these things only apply to federal student loans. If you've borrowed or refinanced from a private lender, it's slow for you. The good news, though, is that most private lenders offer similar relief opportunities for borrowers.

    The policies depend on the company, but they all generally offer forbearance or deferment in some form, and most are waiving late payment fees during this time. The only sure way to know your options is to call them. So, yeah, do that.

    Could be worse, could be much better.
    Stefon Walters
    March 26, 2020
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