COVID-19 (aka Coronavirus) And Your Student Loans
Last Update: November 16, 2020
Many of you have been asking questions about what to do during this period of 0% student loan interest rates. Others that are students still have questions about loans and graduation.
This page aims to answer these questions and more. Below is a table of what you will find on this page:
0% Rates Ending & Refinancing
The executive order signed by President Trump to extend the $0 payment and 0% interest rate is set to expire at the end of December. As of now, there has been no announcement to extend it. Therefore, many of you have been asking if you think you should refinance your Federal student loans.
The reason why some are refinancing their Federal student loans is that the rates are at all-time loans. Those that are refinancing see it as an opportunity before rates go up to save a lot of money in the future. Thus, they are willing to forgo the 0% interest rate even if it gets extended longer. If you'd like to check rates, we've seen 10 year rates around 3.5% with Splash Financial recently.
However, with that said, there is a lot of uncertainty. This uncertainty stems from possible shut-downs, potential challenges to the election, and potentially a new presidential administration. Note: some of you may get made for us saying "potentially a new presidential administration." However, we have to acknowledge that states won't certify who won until December. Therefore, ignoring that when President Trump has yet to concede would be negligent on our behalf.
Due to these massive uncertainties, you should seriously consider staying in your Federal loans. The reason being is that a few extra dollars in interest may be worth it if you were to loose you job in the coming months.
IF YOU HAVE PRIVATE LOANS, definitely look into refinancing. Even if you already did so in the past. Rates have dropped tremendously. Again, Splash financial is who we recommend you check with because they've had the best rates recently.
President Trump's Executive Order
President Trump signed an executive order on August 10th extending the $0 payment, 0% interest rate on student loans which was originally put into law in the CARES Act. The questions about this order is the same as any executive order, is it legal and what happens for PSLF forgiveness payments/IBR payments? We aren't lawyers so we will discuss what to do regardless of it its legal or not.
We know 100% that payments are suspended through September 30. The first situation is that the executive order holds. Therefore, continue doing what you've currently been doing and pay very close attention to student loan announcements over the next few weeks.
What I think will happen... There is a chance the executive order will be deemed unlawful before September 30th. However, I don't think that is likely because it will be extremely unpopular for any politician seeking reelection.
Instead I believe either a) the executive order will be left in place or b) Congress will agree to a new stimulus package before September 30th and that stimulus law will replace the executive order.
Either way, we suggest bookmarking this page and checking back for updates because there should be a lot of information coming over the next month and a half.
As for PSLF and loan forgiveness (IBR), Betsy Devos announce on August 22 that if you are in forbearance and on PSLF or IBR, that those months will still count towards forgiveness. However, like before, our understanding is that you had to have been in those programs before March for the months to count.
As of now, we have no confirmation for those that graduated after March and wanted to use these programs. I.e. do you get these months counted towards forgiveness or not? Therefore, if you are working at a non-profit and started after March, we recommend applying for an income-based repayment plan and entering repayment. Don't trust the government that they are going to give you credit.
For those already on PSLF, we have received confirmation from Fed Loan Servicing that they will not be updated your number of months towards forgiveness until after the forbearance period is over. As of now, that means the earliest they will update it is in January.
COVID Student Loan Info For Students
A lot of you have gotten your graduation date pushed back or have recently graduated and are not getting good answers from your loan servicers.
We recently did a workshop for the University of Michigan's DPT department. We decided to turn that workshop into a podcast and video. In the podcast and video you'll hear the detailed things you need to know about COVID and how to manage your loans during this time.
We deeper dive into your grace period and how to develop your student loan plan and answer questions such as "does my grace period get extended" as well as "my school postponed my graduation. What happens to my loans?"
For more podcasts be sure to check out the FitBUX Podcast page.
What Will Happen To My Required Monthly Payment?
Your required payment automatically will go to zero. It will be this way till September 30th. President Trump signed an executive order to extend through December 31. However, this may change over the coming weeks.
What Should I Do First If My Income Goes Down?
Nothing, you already have a $0 required payment. If your income is still depressed at the end of September then apply for an income driven repayment plan. Your monthly payment should be $0 per month or extremely low.
I Was Considering Refinancing My Federal Loans. What Should I do?
If you're set on paying off your loans, know that your job is secure, and you have a large cash buffer (or you live at home and don't have rent), then you can continue down the refinance path.
Also, if you have private loans already, then you should look into refinancing.
With the current interest rate picture, we're seeing incredibly low rates. Remember that checking your rates does not impact your credit score and does not cost you anything. We're also available to assist throughout the process, at no cost to you using our Free Student Loan Refinance Service.
Below are the refinance companies offering the lowest rates (in most cases), in the current environment:
Should I Call My Loan Servicer?
We're getting feedback that folks are on hold for hours and are not getting answers. Unless it is a true emergency, you should be able to make your changes online and save yourself some headaches (and time).
What Should I Do With My Retirement?
If you have been laid off and are no longer employed you should immediately rollover your 401k or 403b into an IRA. In addition, if you don't have a large emergency fund, if your rollover IRA is the only money you have, and its a relatively low amount (for example $20,000 or less), then have it in an extremely conservative investment.
Also, depending on when this contraction ends, you may want to convert the rollover IRA to a Roth IRA. However, this should only be done towards the end of the year when you know what your annual income is. More information to come about this in the future.
Earnest encourages borrowers who are experiencing financial hardship to reach out to its Client Happiness team via its email portal. While those who need immediate assistance can try calling (888) 601-2801, Earnest says wait times are longer than ever due to the coronavirus outbreak.
Earnest said it has created options for those who are struggling to pay back their loan. As you inquire about what’s available to you, Earnest recommends providing the following information:
- How you’ve been financially impacted by this crisis
- The industry you or others in your household are working in
- When you anticipate being able to resume payments on your loans in the future
Earnest has always offered a number of borrowers protections, including,
- Forbearance for up to 12 months
- The option to skip a payment
- Interest rate reduction for up to six months
- Term and rate modification for borrowers who are unable to pay
- Deferment for those who go back to school or meet other criteria
- Loan discharge for borrowers who experience a permanent disability
If you’ve been impacted by the pandemic, contact Earnest as soon as possible to find out which of its current or new offerings could provide some financial relief.
SoFi is asking borrowers who have been impacted by the coronavirus to reach out to its servicing partner MOHELA by calling (877) 292-7470, or to contact SoFi by emailing email@example.com or by chatting with customer service at SoFi.com.
While it may be expanding borrower protections as the pandemic winds on, SoFi already offers the following to its refinancing customers:
- Temporary forbearance if you lost your job, are experiencing financial hardship, were involved in a military mobilization or experienced a natural disaster
- Deferment if you went back to school, are serving on active-duty military, are facing economic hardship or meet another requirement
- Interest rate deduction of 0.25% for putting your student loans on autopay
- Loan discharge if you experience a permanent and total disability
If your income has been impacted by the coronavirus outbreak, Laurel Road advises contacting its loan servicing partner, MOHELA, at 1-877-292-6845. The servicer may be able to offer forbearance or other hardship relief to borrowers.
Laurel Road offers full or partial forbearance for three-month periods at a time, up to a total of 12 months. Some qualifying reasons include job loss or unpaid maternity leave.
You can keep track of other Laurel Road measures in response to the coronavirus crisis by visiting laurelroad.com/coronavirus-response.
Splash Financial works with banks and credit unions to provide student loan refinancing to its customers. While none of its lenders’ policies had changed as of the writing of this report, Splash Financial says it’s nonetheless committed to helping people on an individual basis.
“Anyone who needs support during this time should reach out to us, and we will work with them on an individual basis to either put them on forbearance, waive fees,” or take other action, says the company’s founder and CEO Steven Muszynski “This is an extraordinary time, and we are committed to working to help our borrowers get through this.”
Some of Splash Financial’s lending partners may already offer deferment or forbearance, and most allow deferment for borrowers in medical or dental training. You can reach out directly to your refinancing provider to learn about your options, and can also contact Splash Financial at 1-800-349-3938 or firstname.lastname@example.org.
If you refinanced with College Ave Student Loans, you can get in touch with its representatives at (844) 803-0736 during weekdays, or via email on its contact page.
Currently, College Ave already offers:
- Hardship forbearance in three- to six-month increments for up to 12 months
- Student loan deferment for students enrolled in school and those on active duty in the armed forces or National Guard
CommonBond is allowing borrowers to pause payments through natural disaster forbearance, as COVID-19 has been classified as a national disaster. Through this type of forbearance, you can pause payments until the end of the national emergency declaration.
You can apply for CommonBond student loan forbearance here. Within three days, you’ll receive an email to schedule a call with a forbearance specialist, and your application should be processed approximately three days after that.
Note that interest will continue to accrue on your student loans during forbearance, but you won’t have to pay any fees to participate. CommonBond is also waiving all late fees for its members throughout this emergency.
For more information, you can email CommonBond at email@example.com or call its team at (800) 975-7812.
LendKey is working with borrowers on an individual basis to help them manage their student loans. If you have questions, you can contact them at firstname.lastname@example.org or by calling (888) 966-9268.
Since LendKey partners with different community banks and credit unions across the country to provide student loan refinancing, it’s also worth contacting your specific lender or loan servicer directly to learn about your options.