The coronavirus is impacting the entire world. Potentially, it could even be the catalyst to pause student loan payments.
President Trump just announced he is proposing to waive interest on federal student loans. Editor’s Note: We will continue to update this story as changes occur.
Earlier today, Treasury Secretary Steven Mnuchin says that the administration is also considering pausing student loan payments for up to three months.
Rep. Alexandria Ocasio-Cortez (D-NY) also has said that the federal government should stop payments on student loans right now due to the economy today.
She expressed her concern via tweet:
“The Federal government should consider pausing collection on student loan debt,” Ocasio-Cortez says. “We should also consider measures on mortgage relief.”
With 45 million Americans dealing with more than $1 trillion in outstanding student loan debt, it’s no surprise that student loans are part of the conversation right now.
The future of the economy and job outlook is unpredictable right now. The coronavirus can lead to a change in income for many Americans, making it difficult to make student loan payments each month. There are far fewer people traveling, dining out, and even planning on leaving their home at this point, which clearly impacts several industries and jobs. With more and more schools closing, parents of young children will no doubt have their employment impacted.
Ocasio-Cortez is a Bernie Sanders supporter. Sanders is a supporter of widespread student loan forgiveness, for both federal and private student loans. The Senator has proposed to cancel all student loan debt, put a cap on student loan interest rates going forward and allow borrowers to discharge their student loans in bankruptcy.
How can I pause my student loan payments
Even if this doesn’t further develop, there are ways you can pause or lower your student loan payments.
If you have federal student loans, many loans are eligible to be repaid on an income-driven repayment plan. Federal loans can also be deferred if you are unemployed or facing an economic hardship.
If you have private student loans, depending on your lender, you may still be eligible for a temporary deferment. Or your lender may be willing to work with you for assistance.
Another option for private student loans is to refinance student loans for a lower interest rate. Look for a lender, like Earnest or SoFi, that let you choose a longer loan term. If you choose a longer repayment term, this could lower your monthly payment. The longer your repayment, the more interest you will pay, but it could be a good option if you’re struggling to make payments.
Keep in mind that refinancing federal student loans means a loss in many benefits, including income-driven repayment options, any federal forgiveness options, generous deferment options, and more.
If you are experiencing financial difficulty, call your lender before you stop making payments on your student loans.
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