How To Lower Or Stop School Loan Payments During The Coronavirus Pandemic
EDINBURGH, SCOTLAND – JANUARY 24: Tourists wear face masks as they visit Edinburgh Castle on January 24, 2020 in Edinburgh, Scotland. It has been confirmed that 14 people in Scotland with symptoms have tested negative for the coronavirus, which has killed at least 26 people in China. A daily incident management team has been created by the Scottish government to monitor the developing situation. (Photo by Jeff J Mitchell/Getty Images)
Times are tough right now, and with layoffs and more people getting sick every day, they are getting harder. Luckily, as reported, President Trump is suspending evictions and foreclosures, which will alleviate some financial burden.
For many with school loans, paying them can be another burden. Luckily there are ways to stop or lower the bills altogether. As Forbes explains, "The federal student loan waiver announced by the U.S. Department of Education on March 13 won’t reduce your loan payments now. Instead, it will limit the amount of interest that accrues and could lead to a shorter repayment timeline. But it does make certain federal repayment options a better bet than usual."
They also give advice on ways to lower or stop payments altogether:
Switch to an income-driven plan - The income-driven plan "ties monthly payments to a borrower's earnings." With this, you usually pay 10 to 20 percent of your income each month, depending on the plan. This means, if you have no income, you don't pay anything. It's not a permanent solution, but it will help.
Postpone loan payments with deferment or forbearance - Every situation is different, but you can usually defer payment for up to three years over the lifetime of a loan. Typically, the only negative aspect of this option is that even when you aren't paying on the loan, interest accrues. Per Forbes, "interest would continue to accrue during both deferment and forbearance, except for borrowers with subsidized federal loans (on which the government pays the interest during periods of deferment). That accrued interest would get added to your balance at the end of your deferment or forbearance period, increasing the amount you owe." But since federal student loan interest is currently being waived, this won't apply.
If you have a private loan, there are still options - Private loans operate under a different set of rules, but there are options. Check with your lender to see if they offer loan modifications. They could significantly reduce your interest rate and your bill. There are even banks out there, like Bank of America and Capital One, that are offering coronavirus-specific relief. Each one has a different set of rules, but in the end, they can work with you to make life easier.
