The COVID-19 pandemic has shaken the entire United States and turned life upside down for most Americans. To slow the virus’s spread, both state and federal governments are requiring people to stay at home. The financial burden of closed businesses and a struggling economy is a reality that many people are facing. Since the new coronavirus came to the U.S., more than 16 million individuals have lost their jobs.
Due to the high amount of student debt in the country, the federal government temporarily suspended student loan payments in hopes of providing relief for struggling individuals. If you have student loan debt and are worried about your ability to make payments amidst COVID-19, here’s what you need to know about student debt relief right now.
Which Student Loans are Eligible for Forbearance?
On March 27, President Trump signed into law the CARES Act, or the Coronavirus Aid, Relief, and Economic Security Act. A $2 trillion relief package, the law provides financial payments and debt relief to individuals and families across the United States. One of the most significant portions of the CARES Act is student debt relief.
From March 13, 2020, to Sept. 30, 2020, federal student loan borrowers will not be required to make payments on their student loans. During that time, additional student loan interest will not accrue. It’s important for student loan borrowers to note, however, that the government-induced forbearance only applies to specific federal student loans. If you have private student loans, you will need to consult with your lender regarding your options.
Do I Need to Apply for Paused Student Loan Payments?
When the government initiated student loan forbearance as part of the CARES Act, it was automatically applied to all eligible federal student loans. Individuals with federal student loans should check with their lender to ensure their loan is eligible. However, they do not need to apply for forbearance.
Those with private student loans who are in need of relief might be eligible for loan deferment or forbearance. Some private lenders offer alternative payment options, such as:
- Income-based repayment plans
- Lengthened payment plans
- Graduated repayment plans
Any person experiencing hardship due to the coronavirus pandemic will need to apply for alternative payment options for their private student loans.
When Will I Have to Start Paying My Student Loans Again?
Automatic federal student loan forbearance will end on Sept. 30, 2020. That means all student loan payments will automatically resume in October 2020. Borrowers who were enrolled in automatic payment plans will begin to see their payments come out of their accounts again and those who made payments online or over the phone will need to resume those payments. Borrowers who were enrolled in automatic loan payments should check with their lender to ensure the right payment information is on file by October. Accounts with incorrect payment information will risk going into default and being sent to collections.
Talk To a Legal Professional About Student Loan Debt Settlement
If you were struggling with your student loan debt before the pandemic, it’s important to know that there are financial options available to you that can alleviate your burden. Student loan settlement is an option that can help you walk away from your student loans paying less than you currently owe.
McCarthy Law PLC is a trustworthy source of legal representation for student loan borrowers in need of help. Our number one goal is to help you erase your debt, restore your credit, and get your life back. We know the ins and outs of negotiation and will work tirelessly with lenders to ensure you’re able to walk away from your financial situation free of student loan debt. To schedule a free consultation, call 855-976-5777 or contact us online today. We’re here and we want to help you.