If you’re worried about paying off student loans during a pandemic, don’t – for now.
Last week, President Donald Trump signed a $2 trillion stimulus package called the CARES Act, which, among other things, paused all federal student loan payments through the end of September. Until then, your loans won’t gain interest or affect your credit score.
Here’s what you need to know about what’s going on with federal student loans – and how some private lenders are adjusting, too.
Federal student loans
If you’re one of the 43 million people with federal student loans, you’re not required to pay off those loans until at least October. But there’s a lot of other ways federal student loans have been impacted by coronavirus:
1. Employers can make payments on your student loan
Your employer can make payments of up to $5,250 on your student loans – either directly to you or your lender – for the rest of the year. Those payments are tax-free from March 27 until the end of the year.
2. Your loans won’t accrue interest
Interest rates were cut to 0 percent as of March 13. Currently, this is set to last through September as well. When October comes, your interest rate will go back to normal.
3. You can still pay off your student loans
Although you don’t have to, you’re still able to make your monthly payments. Even though there’s no interest, your monthly payment amount still remains the same. For those who can afford it, make some payments while you’re not building up interest.
4. These changes automatically apply
You don’t need to go to your lender and ask to pause your payments manually – it’s already done for you. Once the pause on federal student loans is lifted, your monthly payment will go back to what it originally was.
5. There are two exceptions
The two types of federal loans that don’t apply to the paused payments: Perkins Loans and Federal Family Education Loans (FFEL). Perkins Loans haven’t been issued since 2017, and FFELs haven’t been issued since 2010. Borrowers of those types of loans are still responsible for payment with accrued interest.
6. You can pay less for student loan forgiveness
Student loan forgiveness programs require 120 payments. Each time you choose to skip your payments from now until the end of September, it actually counts as a payment. So the CARES Act allows you to make less than 120 payments for loan forgiveness.
Private student loans
If your student loans come from a private company, you won’t get to reap the benefits that the federal government is offering – sorry.
While many organizations such as Wells Fargo, Bank of America and Chase haven’t mentioned anything about student loans, other loan companies are offering breaks all the same. Here’s what you can get from six of the country’s top private student lenders.
1. Sallie Mae
Worth a whopping $20 billion, Sallie Mae is the largest private student loan provider in the United States. The company isn’t offering any specifics, but it does urge you to contact service agents through the Sallie Mae app or call 800-427-5543 to discuss your options.
2. PNC
If you get your student loans from PNC, you’re in luck. The bank says you may be able to postpone payments for up to 90 days without paying late fees, and that loan modification options are available.
To opt-in, go to www.aessuccess.org and select “having your payments postponed” to talk with a PNC representative.
3. Discover
Discover wants its student loan customers to call 1-800-223-5614 to find out about support options, but they do offer some answers about possible student loan situations:
- If the classes you were planning to use the loan on were canceled, you can put them on hold to be re-issued later by calling 1-800-788-3368.
- If you aren’t sure if you need the loan, you have 150 days to leave the application open. If it isn’t finalized by the end, then it will automatically be canceled.
- If you no longer need some of the funds disbursed, you can work with your school’s financial aid office to return the funds. You can also put future disbursements on hold by calling 1-800-788-3368.
4. Citizens Bank Education Finance
If you have a loan at Citizens Bank, you can get “payment assistance” on your student loan for up to 90 days with no credit impact. You can also apply for a late fee waiver. To see what options are available, call 1-866-259-3767.
This includes BB&T and SunTrust customers
5. Key Bank
If you’re with KeyBank, you can apply for a forbearance, which means the bank will agree to suspend or reduce some of your loan payments. You may also be able to snatch an extension to your loan term and defer payments for up to 90 days without affecting your credit.
However, interest will still add up and you do have to prove that you can make future payments to be considered for any forbearances or extensions. To chat about student loans with KeyBank, call 800-877-2860.
6. Navy Federal
Veterans banking with Navy Federal may qualify for student loan extensions, deferred payments, and late fee refunds. To find out if you can get any benefits, call 1-877-304-9302.
