Federal student loans in the time of COVID-19- What should you do?

Federal student loans in the time of COVID-19- What should you do?

May 02, 2020

If you’re one of the millions of Americans who hold federal student loans, chances are you’ve heard about the 6-month payment and interest waiver as a result of the legislative response to COVID-19. As of right now, federal direct student loan borrowers are not required to make payments on their loans until October of this year. Additionally, interest will not accrue on the loans (yay!).

According to the legislation, this “administrative forbearance” and interest waiver are automatic. If you are enrolled in automatic payments, double check that your loan servicer did not accidentally debit your payment from your account. And on the flip side, be sure to check in October that they’ve resumed your automatic payments and you don’t accidentally miss a payment.

For borrowers in income driven repayment plans, you are still required to recertify your income and family size during this time if your recertification date comes up.

In general, if you are going for long-term forgiveness of your loans, and especially if you are going for public service loan forgiveness, it makes sense for you to take advantage of the payment suspension and stop making payments on your federal direct student loans. If you are planning to pay off your loans in full, then you would likely benefit from aggressively paying on your loans even though you don’t have to right now. Since there’s no interest accruing, you’re getting more “bang for your buck” on the payments you make. Every situation is unique, however, so if you have questions on your specific loan situation, please set up a call and we can discuss this. 

If you hold private student loans, FFEL loans, or another type of loan not covered by this legislation, contact your loan servicer if you aren’t able to make your loan payments during this time.