Many Millennials are facing student loan debt. As you may already know by now; the government has enacted a mandatory deferment on all Federal student loans from March 13th, 2020 – September 30th, 2020.
That means people holding Federal student loans do not have to make a principal or interest payment until October of 2020 unless the Cares Act becomes extended. The credit status of the loan will continue to report as it had been reported in March during the duration of the deferment.
If your income has been affected; this gives you time to look for employment. If not, this can be a time where you can add extra money toward your payment because you will not have to pay interest. That will allow you to knock down some of the principal. You can also call your loan servicer to ask for a re-calculation if you were on an income-based repayment plan and your income was affected.
If your student loan account was delinquent before the Cares Act; this can be an opportunity for you to add the extra interest that you would have been paying to the delinquency amount to bring it current. For those who were on a loan rehabilitation plan where you are required to make 9 payments in 9 consecutive months; the deferred payment months will continue to count towards eligibility for the program as if payments were made even though you are not required to pay until October.
This Cares Act does not affect Private Loans that aren’t owned by the government. You can contact your private loan servicer to see if they are offering any remedies if you’ve experienced hardship due to Covid-19. One method you can use to convince your private loan holder to offer you something helpful can be to share with them that you have a right to consolidate your private loans into one Federal loan and it seems that is your only option. In that case, they may be persuaded to work with you.
The Below are resource links to guide you to find out more information about the Cares Act:
Department of Education: https://www2.ed.gov/about/offices/list/ope/caresact.html
Consumer Financial Protection Bureau (CFPB): https://www.consumerfinance.gov/about-us/blog/what-you-need-to-know-about-student-loans-and-coronavirus-pandemic/
CFPB Credit Reporting Guidelines: https://www.consumerfinance.gov/about-us/newsroom/cfpb-issues-credit-reporting-guidance-during-covid-19-pandemic/
SLBA (Student Loan Borrower Assistance: https://www.studentloanborrowerassistance.org/help-for-private-student-loan-borrowers-during-covid-19-crisis/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+studentloanborrowerassistance%2FyPwH+%28Student+Loan+Borrower+Assistance%29
Forbes Article on Private Loans: https://www.forbes.com/sites/adamminsky/2020/05/19/student-loan-servicers-are-dinging-credit-reports-for-the-cares-act-forbearance/#66a9da8d65fa
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