Whether you are a current college student, or are busy chipping away at your student loan debt there is a good chance that the COVID-19 virus disrupted your student loan plan. Most of our time was spent in of swirling confusion as we waited for updates from the government. You were probably asking yourself questions like:
1. Is my school going to be open or closed? Are classes cancelled or will we work remote?
2. Are we going to get stimulus checks? How much can I expect? Can/should I go on unemployment?
3. Do I still need to repay my student loans? What if I was laid off due to COVID?
NOTE: This article will focus mainly on FEDERAL student loans, not private loans. If you need help with student loan relief, learn your options or call 888-856-2668
What’s going on with student loans?
Luckily for those people with burdensome student loan debt, payments on federally-owned student loans have been deferred until September 30, 2021. If you are not familiar, “in deferment” just means that payments on your loans have been pushed back.
This was originally announced on March 20, 2020 when the office of Federal Student Aid provided temporary relief. The plan included the suspension of loan payments, a halt on collections on defaulted loans, and a temporary interest rate of 0%. This relief has since been extended.
This means that you are not obligated to make any payments until September 30th, 2021 and you are also still not being charged any interest during this time. The break was designed to allow people to spend more of their household income towards paying for essentials during the pandemic instead of trying to repaying debt.
That said, you can still continue to pay down your balance before September 30th, 2021 if you want.
Why it would be smart to continue paying on your loans
Even though you are not obligated to pay your loans right now, this is an excellent time to strategically pay down your student loans. This is because your loans are not currently collecting interest, which means that any payment you make will go directly towards paying down your principal.
Any payment that you make towards your loans now will go much further than a payment made after September 30th. We might even advise cutting back other expenses so that you can really focus on paying down more on your loans right now (while they are in deferment and not collecting interest).
We also want to note that since student loan forgiveness was a big part of Joe Biden’s plan as president there is a realistic chance that at least part of your student loan payments might be forgiven.
Keep in mind that all of this only applies to your federal student loans. Any private student loans that you have will operate under their own set of rules that are dictated by your lender. If you are having trouble making your Private student loan payments, you can discover options by calling the Private Student Loan Relief Helpline at 888-669-1064.
Tips for existing students
Current college students have been having an interesting time during the COVID-19 pandemic. Since you are not working yet, you might feel like you slipped through the cracks in terms of stimulus checks.
However, you were actually included in the most recent stimulus check. According to Bankrate, all students over 17 years old that were claimed as dependents are able to receive up to $1,400 (depending on the income of the taxpayers that claimed you as a dependent). If you have not received a stimulus check then we would recommend looking into whether you are eligible for one.
Some other fresh ideas for current college students to consider:
Consider reducing the amount that you borrow – There is a tendency for student loan providers to write a check for the full amount that you need to go to school, which usually includes room and board. If your school is operating remotely then you should be able to work from home (or a cheap apartment) and significantly reduce the amount you are borrowing. This is a small sacrifice for which your future self will thank you.
Take a semester off – With so much uncertainty around higher education during COVID-19, it’s not a bad idea to take a semester (or year) off completely. This will give some time for the dust to settle, and you will be able to resume with no problem once schools are fully in-person. Working in your post-college field, and earning money toward college expenses is always wise.
Take some courses at community college – Part of the reason many people love going to college is for the experience of living on campus and building relationships with new people. If you are being robbed of this opportunity by COVID-19 anyway then it might make sense to enroll in some courses at a community college near you. This will likely be much more affordable than where you are currently enrolled and will allow you to continue your education at a heavily discounted rate without missing the on-campus experience.
Teddy Stavetski is a freelance writer on financial topics.