Repaying student loans amid the coronavirus outbreak
Updated on April 14, 2020
The coronavirus outbreak continues to spread in the US, recording new cases every day and negatively impacting the economy. Additionally, the nationwide lockdown has forced millions of college graduates to stay home, losing their jobs and source of income.
Therefore, policymakers must act to protect economically vulnerable borrowers by empowering them with financial safety. President Donald Trump announced that the government would be waiving off interest on federal student loans earlier this month.
However, what happens to borrowers who were already making payments and have lost their wages?
Besty DeVos, the US Department of Education Secretary, announced on Friday that graduates could postpone their bills for at least 60 days. While this stimulus package is still under negotiation, federal student loan borrowers can pause their monthly bills for six months without interest accruing.
But, Democrats don’t agree with this policy as it only kicks the student loan problem down the road. This means that after the pandemic, borrowers will still have thousands of student loans to pay back. Unfortunately, more and more borrowers will default as a result of the economic damage COVID-19 will cause.
According to Joe Bidden, the government should forgive a minimum of $10 000 for every student borrower and cancel all payments until the pandemic ends. This way, student loan balances will go down, and borrowers can recover along with the economy once the coronavirus ends.
Student loan borrowers with federal loans
Unfortunately, most of these policies aren’t in play, and some loan institutions are expecting monthly payments despite the crisis. For example, some loan servicers are suing borrowers for their overdue debt during the global crisis.
Moreover, companies that service federal student loans may not be able to handle the high volume of borrowers requesting the coronavirus forbearance.
You may file an appeal to stop your loan company from seizing your tax refunds, but this may take weeks to appeal. Hence, now is the time to ask for temporary relief by applying for loan forbearance or deferment.
Alternatively, you can choose an income-driven repayment plan to reduce your payments to fit your income during this crisis. For more information about student loans, contact StudentLoanify today.