All you need to know about COVID-19 and your Student Loans
Updated: Mar 24, 2020
The recent COVID-19 pandemic or Coronavirus has serious implications on the economy. With more and more businesses shutting down, and with an inevitable recession seems to loom, the mission of paying back student loans will become even harder. In the following post Money Compass brings you the latest updates regarding how the authorities try to help borrowers. Some will say it's not enough, but it is definitely a starting point for those who experience hardship during the national emergency.
The Department of Education issued an official interest waiver
According to an announcement made by U.S. Secretary of Education Betsy DeVos, all borrowers with federally held student loans will automatically have their interest rates set to 0% for a period of at least 60 days. In addition, each of these borrowers will have the option to suspend their payments for at least two months to allow them greater flexibility during the national emergency.
For those who wish to continue making payments, for example, if you seek PSLF (Public Service Loan Forgiveness), the "the full amount of their payment will be applied to the principal amount of their loan once all interest accrued prior to the president's March 13 announcement is paid."
Read the full announcement here: DE suspends federal student loans payment.
How to apply for the 0% relief?
The good news is, that the DE automatically reduced the interest rates to 0% on all the Federal Direct and Federal Family Education Loan Program loans for all borrowers. You don't need to do anything in order to receive this relief.
As Nelnet mentioned on their website: "As your servicer, we are working as quickly as possible to update the interest rate on your federal student loans with an effective date of March 13, 2020, the date the President announced the reduction. It could take up to three weeks or more to be reflected on your student loan account." The same goes also for the other loan servicers.
How can I apply for the National Emergency Disaster Forbearance?
For your ED owned student loans, you can get at least 60 days of a "non-capping" administrative forbearance, which means that any interest that might occur during this period, won't be capitalized.
If you are 31+ days past due on your payments, your loan servicer will automatically put your loans on this forbearance. If you're current on your loans, you'll need to contact your loan servicer. Here is a list of the loan servicers and their suggested contact details:
1. CornerStone: Doesn't suggest a unique contact method other than contact numbers - 800-663-1662
3. Granite State — GSMR: Call center number - 888-556-0022
6. MOHELA: Call center number - 888-866-4352
9. OSLA Servicing: Call center number - 866-264-9762
10. ECSI: Call center number - 866-313-3797
As the crisis evolves, we'll see more pressure from various organizations to offer relief for burdened businesses and individuals. It is unclear how deep the impact of the COVID-19 on the economy will, or how long will it last, but it seems that we haven't seen the last effort by legislators to provide financial aid as a way to cope with the coming economic downturn. Hopefully, some of these incentives will be directed towards student loan borrowers.
Have a specific question regarding your loans? Send it to FreeAdvice@moneycompass.io