Loan relief options during the coronavirus pandemic
As the coronavirus pandemic continues and the economy recovers, some American workers still face financial uncertainty. While the United States Bureau of Labor Statistics (BLS) national unemployment rate was 6.1% in April 2021 – a significant drop from the peak of 14.8% in April 2020 – paid employment was down 5.5% in March 2021 compared to the pre-pandemic. peak employment in February 2020, according to a statement released on April 2 by BLS Commissioner William W. Beach.
For those facing financial problems, there are relief options available from banks, lenders, and the federal government. If you can’t repay your loans, or if you won’t be able to repay them soon, one of these programs can help.
Federal student loans
In March, President Joe Biden issued executive action to continue federal student loan payments and interest relief until September 30. The new action includes some benefits of the original coronavirus relief program, but not all. It expands the program to include borrowers in the Federal Family Education Loan Program (FFEL) who have been in default since March 13, 2020, automatically returning wages and tax returns seized and reinstating defaulted accounts to the bank. rule, as well as offering refunds on voluntary payments made. since that date.
Waiver of interest
Federal student loan interest rates will remain at 0% until the end of September. Borrowers don’t need to take any steps to put this in place. However, check your student loan statements each month to make sure that interest is not charged on your federal loans until September.
Suspension of payment
Federal student loan borrowers have also extended relief on monthly student loan payments. Payments on direct loans held by the Ministry of Education are suspended until September 30. This suspension of payment is also automatic.
This suspension does not make your student loan debt go away, but it does save you money on your monthly payments until September 30. Contact your loan manager to find out if you are eligible for loan forbearance or deferral. To find out which administrator issues your loans, contact the Federal Student Aid Information Center at 1 (800) 433-3243.
If you are working for Public Service Loan Forgiveness, you will continue to receive credit during the suspension period if you are working full time for an eligible employer.
Borrowers can also choose to continue making payments during this temporary deferral. If you want to continue your regular student loan payments, your entire payment will be applied to your principal balance, which will help you pay off your debt faster.
If you are using automatic payments, they may have been automatically suspended at the start of the deferral period. Contact your service agent if you want to restart automatic payments.
Private student loans
Private student loan debt is not covered by presidential action – there is no government protection forcing private lenders to forgo interest or defer payments for borrowers.
However, your private lender may offer a hardship relief program or a temporary student loan forbearance. For example, Earnest offers short-term student loan forbearance on demand to eligible borrowers.
If you cannot pay your private student loans because the pandemic has affected your income, contact your lender immediately. Keep in mind that eligibility for hardship relief programs varies among lenders.
Many banks rush to waive fees and help consumers stay on track with their loans despite lost income. For example, Marcus by Goldman Sachs allows clients to defer payments on their personal loans for a month without accumulating interest.
If you are unsure if your lender offers personal loan assistance, contact them directly to apply. New programs may be announced on an ongoing basis, so check back regularly to see if help is available.
Home equity loans
Homeowners who have home equity loans should contact their lenders if payments cannot be made on time. Some financial institutions offer a temporary deferral of home equity loans to those who are eligible.
For example, Bank of America offers a payment deferral of three months or more if your income has been affected by the coronavirus pandemic. If you’re having trouble keeping control of your home equity loan, call your lender to find out more about your options.
List of lenders providing loan relief
This is not an exhaustive list. Contact your lender for more details on the hardship assistance programs they offer.
- Bank of America: Deferral of payment on home loans is available on request.
- Discover: Hardship assistance may be available for personal loan and student loan clients who call a representative.
- Fifth third bank: Mortgage clients can request up to 180 days of forbearance without late fees, and up to 180 additional days using an online portal or by calling a representative at (877) 366-5520.
- LightStream: Personal loan clients can defer monthly payments through an online form or by calling an installment loan relief representative at (800) 828-7959.
- Marcus by Goldman Sachs: Marcus’ customer support program allows borrowers to use an online form to defer one month’s loan payments without interest.
- Cabin crew: The bank provides temporary help to qualified clients with auto loans, personal loans, mortgages, home loans or lines of credit, and student loans. Customers can use an online portal or call a representative.
- SoFi: Student loan borrowers and personal loan borrowers may be eligible for forbearance; both options are available through online portals. Home loan borrowers may also be eligible for hardship assistance, although details are only available through an online portal or by calling representatives at (855) 622-3198.
- TD Bank: The TD Cares program offers a forbearance to qualifying customers who have mortgages, home equity loans or lines of credit. Customers can find out more by calling a representative at (800) 742-2651.
- USAA: The bank offers consumer loan and mortgage payment assistance programs to eligible members, which are available by calling (800) 531-8068.
- American Bank: People with mortgages may be eligible for a payment suspension of up to 180 days with no late fees, and an additional 180-day extension if they request it through their online account or by calling (855) 698 -7627.
Other Steps You May Take Now If You Can’t Pay Off Your Loans
Talking to your lender as soon as possible is one of the most effective ways to get immediate help in times of financial difficulty. In addition to setting up a deferral or forbearance, there are a few other things you can do if you can’t repay your loans:
- Applying for unemployment benefits: The American Rescue Plan Act of March 2021 brings the total number of weeks in which individuals can receive unemployment benefits to 79 weeks. It also provides an additional weekly benefit of $ 300 for those who are unemployed until September 6.
- Reduce discretionary spending: Review all of your non-essential expenses, like restaurant meals, purchases, and streaming subscriptions. Find areas that you can cut from your monthly budget to free up money for loan repayments.
- Refinance your loans: If you have high credit, you may qualify for the current low interest rates. Refinancing can help you lower your interest rate and lower your monthly payment.
- Consider a ready for coronavirus hardship: Available from some banks and credit unions, these are short-term loans that usually have little or no interest. Although the loan amounts are not very large, these loans come with favorable terms for the borrowers.
No matter what type of loan you struggle with, there’s a good chance your lender has options that can take some of the financial pressure off. Your best bet is to contact your lender if you already know that you won’t be making your next loan repayment.