As of late May, the coronavirus crisis has caused nearly 39 million Americans to lose their jobs. Considering nearly four in 10 Americans would have to borrow money to cover a $1,000 emergency, it’s easy to see how many will soon be left struggling to cover their bills.
Fortunately, banks, lenders and the federal government have already begun to address the dire financial situation many Americans will soon face. If you can’t pay your loans or you soon won’t be able to, you do have some options. We’ve included updated information on all of the loan programs that may be available to you below.
What is the CARES Act?
In late March, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Designed to ease the economic impacts on individuals and businesses, the CARES Act opened up $2 trillion for small-business loans, stimulus checks and more. The act also offers temporary student loan relief, an expansion on unemployment benefits, eviction protection and changes to tax benefits and 401(k) withdrawals.
Federal student loan payments are suspended
While it’s possible for the timeline to be extended, borrowers with federal student loans can temporarily suspend their monthly payments without penalty until at least September 30 under the new CARES Act. Interest charges for federal student loans are also suspended until at least September 30.
This change started retroactively on March 13.
This suspension does not make your student loan debt disappear, but it does allow you to save on monthly payments through September. Note that some FEEL and HEAL loans may not qualify; it’s best to contact your loan servicer to find out if you’re eligible for forbearance. To find out which servicer issues your loans, contact the Federal Student Aid Information Center at 1-800-433-3243.
Notably, if you are seeking public service student loan forgiveness, suspended payments during this time period will count toward your 120 required payments as though you made on-time monthly payments.
For those who continue making their regularly scheduled student loan payments, their entire payment will be applied to the principal of their balance, helping them pay down debt faster. Note that if you use automatic payments, these may have been automatically suspended at the start of the forbearance period; contact your servicer if you’d like to start automatic payments again.
Some mortgage lenders step in to provide relief for borrowers
Many mortgage providers have begun taking active steps to help borrowers negatively impacted by coronavirus or a resulting loss in income. For example, Fannie Mae and Freddie Mac are ordering loan providers to provide assistance in the form of mortgage forbearance for up to one year.
With that said, in its current state, this relief isn’t available to everyone. Per a Freddie Mac response on the program, you have to have “a decline in income” in order to qualify.
If you’re interested in mortgage forbearance, the first thing to do is to contact your lender. Banks like Chase, PNC and U.S. Bank all have their own mortgage forbearance programs that may be able to help.
Lenders offer payment assistance for personal loans and home equity loans
Many banks are also stepping up to waive fees and help consumers stay on track with their loans despite losses in income. For example, popular personal lender Marcus by Goldman Sachs is letting customers defer payments for one month on their personal loans without accruing interest.
U.S. Bank is also temporarily lowering pricing and interest rates for consumers interested in personal loans, and Fifth Third is offering hardship assistance for its mortgage and home equity loan customers. Bank of America is also waiving payments on mortgages and home equity products on request, and Wells Fargo is offering fee waivers, payment deferrals and other assistance for auto, mortgage, credit card and personal lending customers who reach out and inquire.
If you’re unsure if your lender is offering assistance on a personal loan, home equity loan or any other loan product, check its website for details or call to inquire. New programs may be announced on a rolling basis, so don’t give up hope that help is on the way.
List of lenders providing loan relief
The following is not an exhaustive list. Contact your lender for details about hardship assistance programs it offers.
- Bank of America: Payment deferral on auto loans and home loans is available upon request.
- Barclays: Personal loan customers can request payment relief by contacting a representative.
- Discover: Hardship assistance may be available for personal loan, student loan and home loan customers who contact a representative.
- Fifth Third Bank: Mortgage and home equity customers can take advantage of up to 180 days of payment forbearance with no late fees.
- LightStream: Personal loan customers may defer monthly payments by signing into their account and accessing the “Account Services” page.
- Marcus by Goldman Sachs: Marcus’ customer assistance program allows borrowers to postpone loan payments for one month with no interest.
- PNC: The bank may waive or refund fees associated with mortgages. It may also postpone monthly payments with no late fees on auto loans, personal loans, mortgages, home equity loans and student loans. Additionally, it is offering an emergency hardship loan for qualified customers.
- SoFi: Student loan borrowers may be able to take advantage of 90-day payment forbearance, and personal loan borrowers may qualify for 30-day payment forbearance with a possible extension. Home loan borrowers may qualify for hardship relief as well, though details are only available through representatives.
- TD Bank: The TD Cares program waives fees or delays payments for eligible personal loan and home loan customers.
- USAA: USAA is offering payment assistance programs for eligible members, which includes a 90-day payment extension on consumer loans and payment assistance for mortgages and HELOCs.
- U.S. Bank: Individuals with mortages may qualify for payment suspension of up to 180 days with no late fees. The bank is also temporarily reducing the APR on new personal loans of up to $5,000 to 2.99 percent.
- Wells Fargo: Borrowers may request a payment suspension for an initial three months on mortgages, home equity products, personal loans and student loans.
Other steps you could be taking now if you can’t pay your loans
While the programs offered by lenders we highlighted here can be helpful as you navigate your finances over the next few months, there are additional moves you could be making that might also buy you some time. Steps you should begin taking now include:
- Contact your lender and ask for assistance. If you are unable to make an upcoming payment on a mortgage or another type of loan, experts suggest reaching to your lender immediately to talk over your options. It may be able to help you pause payments, waive late fees or move your payment due date.
- Look into refinancing. If you still have an income and meet other qualification requirements, it’s possible that you could refinance your mortgage, a personal loan or another loan product you have into a new loan with an extended payment timeline and lower monthly payment. Interest rates recently dropped like a rock due to the Federal Reserve cutting interest rates, so this may be a good option if you can qualify.
- Cut all discretionary spending from your budget. Taking a long, hard look at your spending and bills can also help you determine some areas to cut. In times of financial hardship, it can make sense to keep food spending to a minimum, cancel subscriptions you don’t always use and figure out ways to spend less in your daily life.
- Withdraw funds from a retirement account with no penalty. Under the CARES Act, individuals impacted by the coronavirus may withdraw up to $100,000 from 401(k)s and personal retirement accounts without penalty.