Student Loan Interest Fees Waived - What You Need to Know
Do you have a student loan? See if your loan interest fees have been waived!
In an effort to help alleviate economic hardships brought on by the spread of the Coronavirus, interest on federal student loans have been waived. This will last at least 60 days, starting from March 13, 2020. Here’s what you need to know about how it will work.
Which Loans Qualify
All federal student loans, which includes Direct Stafford loans (subsidized and unsubsidized), Direct Parent and Graduate PLUS loans, and Direct Consolidation loans. To figure out if your loans qualify, the Institute recommends logging into http://www.studentaid.gov and checking to see which lender is listed. If the lender is the Department of Education, those loans qualify.
How to Sign Up
It will be automatic for borrowers, loan servicers, the companies that manage student loan repayments for the government, will waive any interest that has accrued since March 13.
Monthly Bills Will Stay the Same
Loan servicers have clarified that the amount borrowers owe each month will not change. All of the payments will go toward principal, not interest. Paying the principal quicker will shorten the loan term. If you have any previous unpaid interest on your account, your payments will go to that before the principal amount.
Can’t Afford Monthly Payment?
For quick relief, you can put your loans in forbearance, which is more attractive now with the interest waiver. U.S. Secretary of Education Betsy DeVos said any borrower who asks for a forbearance from their servicer will get one for a two-month period.
For longer-term relief, enroll in an income-driven repayment plan that sets your monthly payments based on how much you’re earning. This is better than that forbearance or deferment, because your payments will count toward loan forgiveness (available after 20 years of payments). In forbearance or deferment, you’re not making any progress, even if your loans aren’t currently growing due to the interest waiver.
What to do if Working Toward Public Service Loan Forgiveness
Borrowers who are aiming to get forgiveness through the Public Service Loan Forgiveness program should not put their loans on forbearance if they can afford to keep paying. That way they can still make progress toward their 120 months of payments to qualify for the program. If you need to recalculate your payments for keep them affordable, you can do that immediately online at studentaid.gov.
Relief on Private Loans
Most private lenders do offer some temporary relief for people experiencing economic hardship, but the policies are not as generous as those of the federal government’s. Contact your lender and ask what flexibility they can provide.
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For more information on what the U.S. is doing to help its citizens during the Coronavirus, read official information here.