If you have Difficulty paying off student loan debt There may be some relief options to consider during the pandemic. Student loan debt was a staggering $1.56 trillion as of February 2020, and since late March many borrowers have been financially unstable thanks to the coronavirus and social distancing precautions.
The US government recently stepped in and introduced the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion economic relief package that includes the following Waiver of qualifying federal student loan payments by September 30, 2020. Under this program, interest on federal student loans will be automatically suspended until the end of 2020 to provide borrowers with additional payment ease.
However, the CARES Act only applies to federal student loans that are secured with debt by the US government. Many students also have private student loans that come from private banks, credit unions, and online lenders. While these borrowers may not benefit from the new law, they are not entirely unlucky. If you are one of those borrowers and are having trouble paying yours private student loan as a result of the coronavirus, check out these three options.
1. Refinance your personal student loans
One option if you cannot pay your private student loans during the Corona period is refinancing.
Interest rates are historically low now and a refinance can reduce your payment and make that monthly commitment more manageable. You can check if you are eligible for a better rate on an online marketplace like Credible than what your current lender is giving you. This is ideal for full-time borrowers with no credit lapses.
However, be sure and Inquire about different lenders so as not to get stuck at the first bank you find. This is where many borrowers make their mistake. There is no panacea when it comes to interest rates. It’s also good to be able to compare side-by-side with multiple lenders at the same time. Have a look at pages like Credible where you can easily shop and compare student loan refinance options from multiple lenders without hurting your credit score.
2. Consider forbearance options
The temporary suspension of your student loan payments offers you instant debt relief. Although there is no law prescribing a temporary apology or deferral for private lenders on student loans, many borrowers are voluntarily offering an emergency of 60 to 90 days without payments since the coronavirus shut down the country. The Consumer Financial Protection Bureau said some private lenders will waive late fees and not file negative reports with credit agencies to keep your account in good standing.
To avoid incurring additional charges after the grace period ends, ask your lender if this is the case waive the interest. This way you can prevent your loan balance from growing.
3. Ask for a price drop
That old adage, you never know until you ask, is especially true when it comes to this method. Just ask your lender for a rate cut. Just by reducing the interest rate, you can end up paying a lot less per month on your student loan. This is more effective if you’ve become unemployed or ill, affecting your ability to pay the current amount. Call or write to your private student lender to see if they can lower your interest rate. Let them know that you’re anxious to keep paying off your loan. Find out your tariff now by entering some simple information into Credible’s free online tool.
For additional leverage, you can also tell your lender that you want to refinance with another lender. Your student loan officer doesn’t want to lose your business and may be more open to offering a lower interest rate if they think you could take your business elsewhere.
It’s no secret that a loss of employment and stability has come with the outbreak of the coronavirus. Don’t wait for your lender to get back to you first. If you’re having trouble keeping up with your payments, the Consumer Financial Protection Bureau (CFPB) advises borrowers to contact their student loan administrator to find out what kind of hardship assistance they offer.