Options for Student Loans That Aren’t Eligible for CARES Act Relief

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Zina Kumok

By Zina Kumok

June 2, 2021

UPDATE: On March 30, 2021, the U.S. Department of Education expanded the federal student loan interest waiver and pause of collections activity to all defaulted loans in the Federal Family Loan Program (FFELP). Read below to learn about FFELP Loan Forgiveness Options. 

Since the Coronavirus outbreak became a global problem, the economy has followed a similar downward trajectory. Millions are unemployed which means they’re struggling to pay rent, car payments and of course, their student loan payment. The government stepped in to help, but the relief program doesn’t help borrowers with FFELP student loans or private loans.

When the CARES Act passed in March 2020, federal student loan borrowers everywhere rejoiced. This bill promised automatic deferment on some federal loans with 0% interest accruing during that time. Millions of student loan borrowers were excited to take a break from their student loans and not be charged interest.

But like countless government programs, there’s a catch: many only found later that their student loans didn’t qualify for the program, leaving them to scramble.

If you have student loans that aren’t eligible for this deferment, such as, there are other options available.

Why Some Federal Loans Aren’t Eligible

If you have a Federal Family Education Loan (FFEL loan) that is serviced by a commercial lender, it doesn’t qualify for the 0% interest deferment as part of the CARES Act. Remember, this rule doesn’t apply to all FFEL, or, FFELP student loans, just those provided by a commercial lender.

The FFEL program ended in 2010 so borrowers who graduated around that time may have these kinds of student loans. If you entered college after 2010, you’re likely in the clear. If you’re not sure what kind of FFELP student loan you have, look at your online provider.

“In fact, based on data from the Department of Education, there are an estimated 6 million student loan borrowers with federal loans ‘owned by a commercial lender’ who will not receive any help with their student loans at all, despite having used a federal borrowing program,” said Travis Hornsby of The Student Loan Planner .

According to the Department of Education, a FFEL loan can include Subsidized Federal Stafford Loans, Unsubsidized Federal Stafford Loans, FFEL PLUS Loans and Consolidated Loans. Contact your loan servicer directly to see if a commercial lender services your FFEL loans.

Other Options for FFELP Borrowers

If you’re one of the unlucky ones with loans that don’t qualify for this special deferment period, there are other options.

Income Based Repayment

FFELP loans are eligible for different repayment options including the Income-Sensitive Repayment Plan. This plan bases your monthly payments on annual income and has a 15-year term. They’re also eligible for Income-Based Repayment , which limits payments based on your income. Payments are altered every year as income or family size changes. After 20 or 25 years, any remaining balance is forgiven.


FFELP loans are also eligible for the economic hardship deferment program which students can apply to if they’re struggling financially during this time. FFELP borrowers can fill out the form here .

FFELP loans are also eligible for an unemployment deferment , which is separate from the economic hardship deferment. This applies to borrowers who have become unemployed. Borrowers can apply for that here .

Both of these deferment programs provide an initial 12-month grace period. If you still can’t afford your monthly payment after the 12 months are up, you can apply again. Even though you won’t be making payments, your loans will stay current. Interest may still accrue unless you have a subsidized student loan.

Use our Cost of Deferment Calculator to evaluates the impact of interest capitalization at the end of a deferment or forbearance on the monthly loan payment and the cost of the loan, assuming that the loan payments are re-amortized after the deferment or forbearance.

FFELP loan forgiveness

FFEL borrowers may be eligible for Public Service Loan Forgiveness or Teacher Loan Forgiveness if they consolidate into a Direct Loan. To qualify for this type of FFELP loan forgiveness, they would have to be on a qualifying repayment plan and make 120 qualifying payments to the new loan.

Another option is to get FFELP loan forgiveness through an income-driven repayment plan. This would also require the borrower to consolidate the FFEL loan into a Direct Consolidation Loan.

Keep in mind, however, that if you consolidate you’ll be giving up any credit you’ve built up toward loan forgiveness, as under the IBR plan.

The ChangEd app helps student loan borrowers pay down their debt faster. When you link your credit and debit cards, the app rounds up every purchase, and adds that “spare change” to your student loans. You can also earn points for potential free payments. Read our review to learn more.

Private Student Loans

Many private student loan lenders are offering options to pause payments .

Sallie Mae, for example, says that it is offering its borrowers “a three-month suspension of student loan payments with no late fees, no impact to credit standing, and no collection efforts while the account is in forbearance.” Sallie Mae also offers a loan modification program for customers who experience more severe and/or longer-term hardship.

Currently, there are 10 states that are offering private loan borrowers to postpone payments.

If you have private student loans with a high-interest rate, you can also consider refinancing . This could result in a lower interest rate. Refinancing federal student loans, especially right now, might not be the best idea. Federal borrower that refinance will lose the current option to pause payments with zero interest. Anytime you refinance federal loans, not just now, you lose the option for student loan forgiveness, making payments based on your income, the potential for widespread cancellation, and an option to pause payments if you lose your job or have an economic hardship.

Consider the pros and cons of refinancing private student loans. If you decide it’s for you, see our list of the best student loan refinancing options.

At Savingforcollege.com, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.

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