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Coronavirus Outbreak On Federal Student Loan Information

It’s always a good idea to be informed to protect yourself and your family against any potential dangers. For example, you may have heard about a coronavirus affecting some federal student loans, but you might not know what it means for you. In this article, we will tell you everything about the coronavirus outbreak on federal student loan information so that you can stay safe.

What is COVID-19?

The Coronavirus is a type of virus that causes respiratory infections, similar to the common cold. It’s also known as Severe Acute Respiratory Syndrome or SARS for short. COVID-19 refers specifically to this Coronavirus confirmed by federal officials on new student loans being issued through the Federal Student Aid program. So, if you have had your federal loan application process in 2019, you may be at risk of contracting COVID-19.

How will I know if Coronavirus impacts my loans?

One directive instructed the U.S. Department of Education to extend the existing payment suspension and interest waiver for most federal student loans through at least September 30, 2021. The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act initially set up this student loan payment suspension. In response, the Education Department announced it would continue the pause on federal student loan payments and collection actions at President Biden’s request and keep borrowers’ interest rate at 0%. 

CARES Act

This act also directs the Education Department to provide monthly reports on federal student loan repayment activity, including debt defaults and other metrics. The reporting requirements help Congress monitor how effective public-private partnership will affect Coronavirus borrowers’ ability to repay their loans by limiting the risk of default.

The Education Department has issued its first report, which shows that over the last three months:

  • The number of Coronavirus borrowers entering repayment dropped by 25%, and their average monthly payment declined from $329 to $272.
  • The number of borrowers defaulting dropped by 24%, from 13.0% to 11%.

How will I know if my loans are impacted?

One directive instructed the U.S. Department of Education to extend the existing payment suspension and interest waiver for most federal student loans through at least September 30, 2021.

CARES Act initially set up this student loan payment suspension in May 2019 when President Biden signed it into law. In response, the Education Department announced it would continue a pause on federal student loan payments and collection actions until at least September 2020 (or later) as part of its implementation under current regulations, which allow extensions upon Presidential request.

This act also directs the Education Department to provide monthly reports on federal student loan repayment activity, including debt defaults and other metrics. The reporting requirements help Congress monitor how effective public-private partnership will affect Coronavirus borrowers’ ability to repay their loans by limiting the risk of default.

Student loan forgiveness on Coronavirus

Many students are eligible for student loan forgiveness under other provisions, such as Public Service Loan Forgiveness (PSLF). PSFL was created by President George W. Bush and approved by Congress in 2007.

To qualify, borrowers must be employed full-time or part-time with a federal agency, state government, local government, or qualifying non-profit organization that has made their repayment status public knowledge. Make 120 monthly payments on Direct Loans while working at least 30 hours per week for this employer; Have an income below $70,000 annually or less than half of what your family makes if you have one dependent and no spouse who works, or $120 per year without dependents, and Have less than $60,000 in debt when you qualify for forgiveness.

Borrowers should contact their lenders if they have not received any information from them with questions regarding payment suspensions due to Coronavirus infection. The federal government has outlined the following contacts who can answer your questions related to your situation: U.S Department of Education/Federal Student Aid at 800-433-3217, U.S Department of Education/Federal Student Loan Ombudsman Group at (877)557-2575, or borrowers can reach their lenders for more information including the processing date and amount of monthly payments.

What should I do if COVID-19 impacts my loans?

Current and former students and parents who have questions regarding their payments should reach out to the loan servicer to whom their payments are submitted for additional information and should specifically inquire about income-based repayment opportunities and potential eligibility for the Public Service Loan Forgiveness program. 

You have federal student loans that do not appear on your credit report as being in repayment.

Federal Family Education Loans (FFELP) are federally insured or guaranteed education loans made under the Federal Family Education Loan Program by a lender other than Navient and serviced by another entity before December 2010.

If these loans appear on your credit report as repayment, they may be impacted by COVID-19. You should receive notification from your current servicer if FFELP is determined to have been affected by Coronavirus so appropriate action can be taken next steps for borrowers will depend on their specific situation but generally include having an extended period to pay back the loan without interest accruing or reinstatement at no cost to the borrower.

What can we do to stop or mitigate the effects of Coronavirus on our lives?

We can do some things to stop this virus from becoming an epidemic and make our lives miserable with high-interest rates, less money for food or medicine, etc.

Federal student loans are different from private student loans. Borrowers need to understand this because some unexpected things could happen with their federal student loans now that Congress has passed new laws regarding them.

This law was passed to help those who have defaulted or those at risk of default, which means not paying back the money they owe. One such thing is an expected rise in interest rates, but students should also expect less leniency when it comes time for repayment if they are in default.

Tips for managing your student loan debt after being affected by COVID-19

If you have been affected by COVID-19 and are struggling with paying back your student loans, there are some tips for managing them. It is essential to keep on top of things as much as possible because this virus has a way of catching up quickly. So here are some helpful tips:

  • Keep on checking in at least once every week or more if needed. This part is essential, especially when you first start, because it can be hard to know where to begin getting help from etc.
  • Checking in will give you an idea about what might work best for your situation depending on how far into default you may be and so forth.
  • It would help ensure that all information was correct and up to date each time before you checked in. This means full name, address, etc. It may seem like a lot of work, but this will ensure that you aren’t waiting around for your paperwork to be processed because it got lost or something along those lines happened.
  • Finally, once all the information has been verified, they can help set things into motion, including talking about repayment options and consolidation plans if needed.

Federal student loans are different from private student loans. Borrowers need to understand this because some unexpected things could happen with their federal loans now that Congress has passed new laws regarding them.

This law was passed to help those who have defaulted or are at risk of default, which means not paying back the money you owe.

One such thing is an expected rise in interest rates, but students should also expect less leniency when it comes time for repayment if they are in default.

In conclusion

Coronavirus may be a serious matter, but there are ways to help manage it, and if you have any questions about how the virus may affect your loans or what you can do, feel free to contact us today. EdFed offers Student Loan programs that can give you more information.

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