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.”
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.”
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.”
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.”
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:
House Democrats proposed that every borrower receive $30,000 of student loan forgiveness.
Senate Democrats unveiled a student loan forgiveness plan that would forgive at least $10,000 of federal student loans for all borrowers. Former Vice President Joe Biden supports $10,000 of student loan forgiveness.
Sen. Elizabeth Warren (D-MA) proposed to cancel student loan debt for 95% of Americans.
Sen. Bernie Sanders (I-VT) has proposed forgiving all $1.6 trillion of student loan debt, including both federal and private student loans.
Biden has his own $750 billion student loan plan, which is centered on income-driven repayment.
New York Governor Andrew Cuomo temporarily suspended collection of student loan debt and also suspended mortgage payments for those facing financial difficulty.
While Trump called for the end of the Public Service Loan Forgiveness program in his annual budget, he proposed a simplified income-driven repayment plan with student loan forgiveness.