The CARES Act is currently giving student loan borrowers temporary payment relief. And, that relief is scheduled to extend to January 31, 2021. If your loans are not covered under this program. Do these 3 things:
1. Contact your student loan servicer now
Don’t wait until January 1 to start figuring out your student loans. Contact your student loan servicer now so you understand all your options for student loan repayment. Specifically, double check your expected monthly payment, your current student loan balance and your interest rate. This is especially important if you’re a new graduate and your grace period is over.
2. Enroll in an income-driven repayment plan if you are struggling financially
If you are struggling financially, are furloughed or unemployed, or experienced a change in income, you may want to consider an income-driven repayment plan for your federal student loans. There are four main income-driven repayment plans: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) and Income-Contingent Repayment (ICR). With an income-driven repayment plan, your monthly student loan payment is typically 10-20% of your discretionary income and is based on your discretionary income, family size and state of residence. If you are already enrolled in an income-driven repayment plan, now is a good time to contact your student loan servicer to update your income. After 20 years or 25 years of monthly student loan payments, you can receive student loan forgiveness.
3. Consolidate your FFELP Loans or Perkins Loans
Under the Cares Act, only federal student loans that the U.S. Department of Education owns are eligible for student loan relief. That means if you have any FFELP Loans or Perkins Loans, you did not receive any student loan benefits for these federal student loans. Both are considered federal loans, however, they may not be owned by the federal government. For example, FFELP Loans were issued prior to 2010 by banks and other financial institutions, while Perkins Loans are issued by colleges and universities. If student loan relief is extended, and you would like your FFELP Loans or Perkins Loans to become eligible for student loan relief, you must consolidate these loans into a Direct Consolidation Loan. When you consolidate federal student loans, your unpaid student loan interest will capitalize, which means it will be added to your principal balance.
