Everything You Need To Know About Student Loans During Coronavirus

Everything You Need To Know About Student Loans During Coronavirus

There’s so much misinformation floating around right now about what to do with your student loans during the Coronavirus emergency. Let’s set the record straight.

Here’s what you need to know.

Student Loans: Coronavirus

It’s time to end the confusion. Here’s a quick true and false primer to make sure you understand all your options when it comes to your student loans.

1. “I don’t have to pay any interest on my student loans.”

FALSE.

President Donald Trump temporarily waived all interest on federal student loans for 60 days. The interest waiver is automatic, so you don’t need to enroll with your student loan servicer. However, you still need to pay interest on your private student loans.

2. “I can stop paying my federal student loans for 60 days.”

TRUE.

If you want to know how to suspend payment of your federal student loans for 60 days without any penalty, you can contact your federal student loan servicer to request an administrative forbearance. Similar to the interest waiver, this only applies to federal student loans (not private student loans) held by a federal government agency. If you’re not sure if your student loans qualify, contact your student loan servicer to confirm.

3. “I don’t have to stop paying my student loans now.”

TRUE.

You don’t have to pause student loan repayment for 60 days; it’s completely optional. You can still pay your monthly federal student loans, but your monthly payment amount will not change. Even though your interest rates are set to 0%, your full payment will be applied to your principal balance only (once all student loan interest prior to March 13, 2020 has been paid).

4. “I will get student loan forgiveness due to Coronavirus.”

FALSE.

Currently, there is no student loan forgiveness due to Coronavirus. That’s not to say there aren’t proposals to cancel student loan debt. For example:

5. “An income-driven repayment plan will lower my interest rate.”

FALSE.

Income-driven repayment lowers your monthly payment, but does not lower your interest rate. While your monthly payment may decrease, you can ultimately owe more money because interest still accumulates while you have a lower monthly payment. After 20-25 years, you can receive federal student loan forgiveness. Unlike student loan refinancing, however, you won’t get a lower interest rate to pay off your student loans faster.

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