Coronavirus Federal and Private Student Loan Relief Programs

Written by: Kristyn Pilgrim
Updated: 7/13/20

The coronavirus has made a tremendous impact on the financial stability of the United States, with the number of unemployed Americans reaching 30.3 million over the past few weeks. While some financial breaks have been offered to individuals and small businesses, what efforts have been made to help those with student loan debt?

If you’re worried about how the coronavirus pandemic might impact your financial security and ability to pay your student loans, you’re not alone. To help you through this critical time, we’ve compiled an up-to-date account on the federal and private student loan relief efforts that have been put into place.

Federal Student Loan Coronavirus Relief Efforts

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by the federal government to provide financial relief for millions of Americans. One of the provisions in this act offered federal student loan relief efforts. 

If you have a federal student loan, here’s how the CARES Act can help. It will automatically stop payments from March 13 through Sept. 30, 2020, placing everyone’s loans on administrative forbearance. 

This means that you do not have to make payments on your federal loan until after Sept. 30, 2020.

FAQs About Student Loan Assistance Through the CARES Act

There have been many questions regarding the student loan assistance portion of the CARES Act. To help shed some light on this program, we’ll walk you through some of the top questions borrowers may have.

1. Do All Federal Loans Qualify for Forbearance Under the CARES Act?

Most federal loans will qualify for administrative forbearance under this act, with some major exceptions: loans through the Federal Family Education Loan (FFEL) Program and Perkins Loans that are not owned by the federal government. Unfortunately, most borrowers won’t know if their loans are held by federal or private lenders without checking.

If you have questions regarding your loan’s qualification status, it’s best to check the Federal Student Aid website first. 

2. Will My Loans Collect Interest During This Forbearance Period?

If your loan qualifies for nonrepayment under the CARES Act, your loan’s interest rate will automatically drop to 0% until Sept. 30. You should be able to view this updated interest rate by logging into your student loan account.

3. What If I Made a Payment Between March 13 and March 27?

If your qualifying student loan was paid after March 13 and before the CARES Act was passed, you can request a refund. To do so, you’ll need to contact your student loan servicer.

If you do not need your money back to help with your financial situation, you don’t need to take any action.

4. Will My Loans Be Paused If They’re Enrolled in Auto Pay?

Your loan payments should be automatically paused during the forbearance period if they qualify. However, technical issues can occur, so it’s always a good idea to log into your loan servicing account to double-check.

If you’re enrolled in auto pay, most loan servicers will stop your payments during this period. You can also log on and pause your payments to ensure the money doesn’t leave your account.

5. Can I Still Pay My Loans During the Coronavirus?

If your loan qualifies for forbearance, but you can still afford to make your monthly payments, you can absolutely still pay on your student loan. You may need to contact your loan servicer or log on to your account to restart your payments if they have been paused.

In fact, since the interest rate on these loans is currently at 0%, it can be smart to pay down your loans as much as possible during this period since any payments made will go toward the principal balance directly. Of course, this is only a good strategy if you can afford to make these payments.

6. Can I Skip Payments If I’m Enrolled in the Public Service Loan Forgiveness Program?

The Public Service Loan Forgiveness (PSLF) Program allows those working in public sectors to receive full loan forgiveness if they make on-time payments for 10 consecutive years. Even though loan payments are paused through the end of September, will not making payments impact your status for loan forgiveness?

Luckily, no. If you pause your payments during this forbearance period, you’ll still be eligible for your Public Service Loan Forgiveness. clarifies that these borrowers do not need to pay during this period.

Private Student Loan Coronavirus Relief Efforts

While the CARES Act is helpful if you have a federal student loan, it does not provide assistance or relief for private student loans. Private student loans or loans held by nongovernment financial institutions often have higher interest rates and larger borrowing limits, which can make repaying during this crisis particularly challenging to those furloughed or out of work.

Many private lenders and servicers are offering assistance during this period, but you’ll need to reach out to take advantage of any help. Some servicers are offering short-term deferment or forbearance, while others are waiving any late fees or lowering minimum requirements. Some are even offering flexible repayment plans to help you stay on track during this crisis.

It’s best to talk to your servicer directly to find out what your options are.

State-Level Assistance

Some states are providing financial assistance to those with private loans during this pandemic. Many qualifying states are offering 90-day forbearance periods, during which interest will accrue, but borrowers are not required to make payments.

  • California
  • Colorado
  • Connecticut
  • Illinois
  • Massachusetts
  • New Jersey
  • New York
  • Vermont
  • Virginia
  • Washington

Refinancing Private Student Loans

If your student loan provider isn’t offering assistance, and you don’t live in a state offering a 90-day forbearance period, refinancing your student loans could be a good way to lower your monthly student loan payment and help you get a much-needed financial break. You may qualify for a lower interest rate, saving you money in the long term.

If you have FFEL or Federal Perkins loans not owned by the Department of Education, you may be able to consolidate them into a Direct Consolidation Loan to be granted forbearance during this pandemic. However, this process can take weeks to complete and can impact your interest rate. Your new rate will be the weighted average of your prior private loans, rounded up to 1/8th of a percentage after the forbearance period. This might mean your interest rate will then be higher than your previous rates.

Assistance Efforts for Current Students

If you’re currently in school, you might not be worried about student loan repayments right now but instead focused on tuition and housing costs. The good news is that you might be eligible for some financial breaks. Here are the current aid efforts put in place to help students during the coronavirus.

  • Housing refunds: Since most schools are shut down for in-person learning, many colleges are offering housing refunds. You might also be eligible for refunds on dining plans, club and sports fees, or study-abroad expenses. This could also apply to your summer or fall semester if your college has decided to remain open in an online-only capacity. You should reach out to your school to see if you’re eligible for a refund.
  • Emergency funds: The U.S. Department of Education is disbursing $6 billion in emergency funds for college students across the country. These funds are distributed directly to schools based on student needs. These funds could be used to help minority colleges, as well as assist students with technology, food, health care, child care, and other costs. This money is still being dispersed, but you can reach out to your college to find out if you’re eligible for aid.

Use College Finance to Help During This Crisis

There’s no doubt that we’re in an unprecedented time in history, and everyone is still learning the best way to handle this global pandemic. Whether you’re worried about your finances or just exploring your student loan options, let College Finance help connect you with the resources you need during this time.

Check out these resources for more help: