The Coronavirus Student Loan Relief Programs And Assistance

President Trump has declared an State of Emergency to combat the coronavirus pandemic in the United States. For borrowers with student loans, this can be a challenging time. It will only get worse if there is a nationwide quarantine or even a lock-down.

With all of the shutdowns and closures, having a stable income to pay your student loans can be a challenge. Plus, there is a lot of misinformation about what is and isn't applicable for student loan borrowers.

Let's break down what the Emergency Declaration and what it means for your student loans, as well as what will happen if we move to a full quarantine or a government lock-down.

Plus, on March 27, Congress also passed the CARES Act (i.e. the stimulus bill) which provides for more relief for student loan borrowers.

Update: President Trump signed an executive order on August 8 continuing the temporary cessation of payments and the waiver of all interest on student loans held by the Department of Education until December 31, 2020.

Pause Of Student Loan Payments

Note: President Trump signed an executive order on August 8, 2020, continuing to pause student loan payments and keep interest at 0% until December 31, 2020. This memorandum extends all CARES Act benefits. Read the memo here.

This is in addition to the CARES Act, which required the Department of Education to pause student loan payments, principal, and interest, without penalty to the borrower for all federally owned loans. This is automatic - borrowers do not have to request it.

That's a huge benefit for student loan borrowers. No payments for roughly 6 months! 

Note: Interest will not capitalize during this time as well.

If you are setup for auto-debit, the ACH payment will be turned off on April 10. If you have a payment due before then, you need to manually stop it. Also, if you've already had a payment go through and you need the money, you can call your loan servicer and ask for a refund of that payment.

Another benefit is that if you're on-track for Public Service Loan Forgiveness, these 6 months of deferred payments do count for PSLF! That's awesome.

It's important to note that this only applies to borrowers with loans held by the Department of Education. This includes all Direct Loans, and Federally-held Perkins loans and FFEL Loans. The easiest way to tell if you have Federally-held Perkins or FFEL loans is to simply login into your loan servicer's website - you'll see your loan payment $0 and interest rate 0% if they are approved loans for this.

Non-Federally Held Perkins Loans 

If you have a non-Federally held Perkins Loan, your loan servicer is allowed to grant you a three month forbearance if you cannot pay due to a COVID-19 related issue. You can ask for this simply by calling.

Beyond three months, you will need to submit documentation related to your forbearance.

This time will count towards your three year forbearance limit. Interest will also accrue during this forbearance. 

Non-Federally Held FFEL Loans 

An update on April 4, 2020 allows non-Federal FFEL holders the *option* to follow Federal guidance on suspending payments. However, as of this writing, we don't know of any FFEL loan servicers that are offering this.

Help For Delinquent Borrowers

The Department of Education also announced an automatic suspension of payments for any borrower more than 31 days delinquent as of March 13, 2020, or who becomes more than 31 days delinquent, essentially giving borrowers a safety net during the national emergency.

If you're in default, now's the best time to get out of student loan default.

1. Get On An Income-Driven Repayment Plan

The first (and likely best) approach is to get on an income-driven repayment plan before the end of the 6 month deferment period.

The reason that this is the best approach is simple. If your income is low or $0, your monthly payment under these plans will also be $0 per month. Since your monthly repayment is tied to your income, this can give you the flexibility to not be burdened by student loan payments while you deal with your income loss.

It's important that you certify your income based on the "alternative" method, and you would send in a letter that says you lost your job, and currently have no income, or only unemployment income. 

You can apply for an income-driven repayment plan by calling your lender or going online to StudentAid.gov.

Who Should Use This Approach: Most borrowers, especially those who are going for Public Service Loan Forgiveness.

2. Unemployment Deferment

A lesser option, but still viable - especially with the waiver of interest - is to ask for an unemployment deferment. You can get an unemployment deferment for up to 36 months, but you must re-certify your unemployment status every six months.

This can be helpful if you're still unemployed at the end of the 6 month period of deferred payments.

You also have responsibilities under this deferment. You must be diligently seeking but unable to find full-time employment in any field or at any salary or responsibility level even if you are not eligible for unemployment benefits (or if your eligibility expired). You must also be registered with a public or private employment agency if there is one within 50 miles of your permanent or temporary address.

Finally, if you are requesting an extension of your current unemployment deferment, and you are not providing documentation of your eligibility for unemployment benefits, you must certify that you have made at least 6 diligent attempts to find employment on the most recent 6 months.

It's important to note that interest will still accrue while your loans are in deferment, in general. But currently, student loan interest is waived for the duration of the Emergency Declaration.

When you combine the Wavier of Student Loan Interest (discussed below), this may be a good move, but it does have drawbacks. If you're going for Public Service Loan Forgiveness (PSLF), you must be making eligible payments. If you use this deferment, this period won't count towards PSLF. However, if you go on an income-driven repayment plan, even those $0 payments will count towards PSLF.

Who Should Use This Approach: Borrowers who need short term relief and aren't eligible for PSLF.

Waiver Of Student Loan Interest

As part of the Emergency Declaration, Trump waived student loan interest for the duration of the proclamation. As of today, the waiver will last until December 31, 2020. That's okay relief for borrowers, but nothing amazing. It's also confusing.

Here's why it's confusing.  The waiver applies as follows:

• Loans owned by the federal government
• For the duration of the declared emergency

Here's where it get's tricky. Loans owned by the federal government is vague for most borrowers - and many don't know who owns their loans. The following loans are owned by the federal government:

• All Direct Student Loans (basically all loans issued since 2010)
• Some Perkins Loans
• Some FFEL Loans

The "some" Perkins Loans and FFEL Loans is challenging because in the Great Recession, the Department of Education purchased some loans back from private lenders. These loans that were purchased qualify, but most will not (since they are held by private banks).

So, how do you tell? You need to look on your StudentAid NSLDS File, or use this guide to Find Out Who Owns Your Student Loans. All lenders have updated their online portals at this point. If your loan is 0%, you have a Federal loan. If it doesn't say that, you don't have a Federal loan.

Finally, it may take your loan servicer about a week to process this request from the President. However, the Department of Education has said that it will be retroactive and take effect March 13, 2020, regardless of when they get it implemented in their systems.

Private Student Loans

As of now, here are the private student loan lenders offering help:

Ascent: Ascent student loans is offering a Natural Disaster/Declared Emergency forbearance that allows you to postpone payments on your Ascent loans for up to 3 months in the event a natural disaster, local or national emergency, or military mobilization is declared by the appropriate governing agency. Simply call your loan servicer and ask for it.

Citizens Bank: For borrowers in repayment who are impacted by coronavirus they are offering a special three-month forbearance that will not count against their lifetime forbearance limits.

College Ave: College Ave may offer an extension of the grace period for up to an additional six months following separation from school, and up to 12 months of hardship forbearance over the life of the loan. When needed, forbearance is usually applied in 3- or 6-month increments, before re-evaluating with the borrower to determine on-going need. College Ave also offers deferments for members of the U.S. Armed Forces and National Guard who are called to active duty for more than 30 days, and natural disaster forbearance for customers affected by federal disasters, as determined by FEMA.

CommonBond: CommonBond offers up to 24 months of forbearance for student loan borrowers. They also offer a natural disaster forbearance that will last as long as the natural disaster. 

Discover: Discover is the first private student loan lender that is offering borrowers the option to skip two months of payments interest-free. You must contact Discover Student Loans and ask for Discover’s Skip-A-Pay option, and you can defer your loan payments for up to two months - interest-free.

Earnest: Earnest offers borrowers the option to skip one payment every 12 months, with prior approval. Earnest also offers a forbearance option and a rate reduction program. The rate reduction program provides an interest rate reduction for 6-months, which lowers the payment.

ELFI: ELFI released the following statement: At ELFI, the safety and well-being of our customers and employees is what matters most. We're actively monitoring for the latest information on the Coronavirus (COVID-19) outbreak. Our online application process remains open and the ELFI Customer Care Center is open and serving our customers. If any new updates occur, we will post them to this page.

Navient: Navient is currently offering up to 3 months of suspending payments with no impact to the borrowers credit score if you qualify. You must call them and mention that the coronavirus has impacted your earnings.

PNC Bank: Borrowers impacted by coronavirus should call 1-888-762-2265. “We will continue to monitor the situation to determine potential extension or expansion of available assistance, and we will continue to communicate these decisions with you,” a statement on their website says.

Sallie Mae: A spokesman for Sallie Mae said that customers impacted by coronavirus should contact them at 1-800-472-5543 to discuss assistance options available. They are currently offering up to 3 months of suspending payments with no impact to the borrowers credit score if you qualify.

Wells Fargo: Wells Fargo offers various options if you are having trouble making payments – a loan modification program, which temporarily or permanently lowers payments, short-term payment relief for two months, or a forbearance. Call 1-800-658-3567 for more information.