What to do if you can’t pay your loans during the coronavirus crisis


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As the coronavirus pandemic carries on, U.S. workers continue to face job uncertainty. For example, according to a January 2021 report by Gusto, a business payroll platform, furloughs at small businesses in California are 91 percent higher compared to the same time the previous year. And in a separate Gusto report, 30 percent of hourly workers and 12.2 percent of salaried workers from U.S. small businesses were terminated by August 2020.

In the midst of job insecurity and loss of income, however, there are financial relief options available from banks, lenders and the federal government. If you can’t pay your loans or soon won’t be able to, one of the programs below may be able to help.

Federal student loans

The extended federal student loan payment and interest relief under the CARES Act was set to expire on Jan. 31. President Joe Biden issued an executive action to continue federal student loan payment relief through Sept. 30.

The new action includes some benefits from the original relief program, though not all.

Interest waiver

The CARES Act extension under former President Donald Trump temporarily set federal loan interest rates to 0 percent through Jan. 31. With this latest executive action, the waived interest rates will stay in effect through the end of September.

Federal student loan borrowers don’t need to take further action to have this interest suspension activated. However, it’s wise to check your student loan statements each month to ensure that interest isn’t charged on your federal loans through September.

Payment suspension

Federal student loan borrowers also have extended relief when it comes to monthly student loan payments. Payments on Direct Loans owned by the Department of Education are paused until Sept. 30. This payment suspension is also automatic.

This suspension does not make your student loan debt disappear, but it does allow you to save on monthly payments through Sept. 30. Note that some Federal Family Education Loans (FFEL) and Health Education Assistance Loans (HEAL) 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.

If you’re working toward Public Service Loan Forgiveness, you will continue to receive credit during the suspension period if you work full time for a qualifying employer.

Borrowers can also choose to continue making payments during this temporary deferment. If you want to continue your regularly scheduled student loan payments, your entire payment will be applied to your principal balance, which helps you pay down your debt faster. Note that if you use automatic payments, these may have been automatically suspended at the start of the deferment period; contact your servicer if you’d like to start automatic payments again.

Private student loans

Unfortunately, private student loan debt isn’t covered under the presidential action — there are no government protections that require private lenders to waive interest or defer payments for borrowers.

Due to these extenuating circumstances, your private lender might offer a hardship relief program or temporary student loan forbearance. For example, Earnest offers a short-term student loan forbearance for eligible borrowers upon request.

If you can’t pay your private student loans because the pandemic has affected your income, reach out to your lender immediately. Keep in mind that eligibility for hardship relief programs varies between lenders.

Personal loans

Many banks are 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.

If you’re unsure if your lender is offering assistance on personal loans, contact it directly to inquire. New programs may be announced on a rolling basis, so don’t give up hope that help is available.

Home equity loans

Homeowners with home equity loans should reach out to their lenders if payments can’t be made on time. Some financial institutions are offering temporary deferment on home equity loans for those who are eligible.

For example, Bank of America is offering a three-month or longer payment deferment if your income has been affected by the coronavirus. If you’re struggling to stay on top of your home equity loan, call your lender to learn more about your options.

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 through an online form.
  • Discover: Hardship assistance may be available for personal loan, student loan and home loan customers who call a representative.
  • Fifth Third Bank: Mortgage customers can request up to 180 days of payment forbearance with no late fees, and up to an additional 180 days by using an online portal or calling a representative at 877-366-5520.
  • LightStream: Personal loan customers may 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 assistance program allows borrowers to postpone loan payments for one month with no interest by using an online form.
  • 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 or lines of credit and student loans. Additionally, it is offering an emergency hardship loan for qualified customers. Customers can use an online portal or call a representative.
  • 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; both options are available through online portals. Home loan borrowers may qualify for hardship relief as well, though details are only available through an online portal or by calling representatives at 855-622-3198.
  • TD Bank: The TD Cares program waives or refunds fees or delays payments for eligible personal loan and home loan customers. Customers can learn more by calling a representative.
  • USAA: USAA is offering payment assistance programs for eligible members on consumer loans, mortgages and HELOCs, which are available by calling 800-531-8068.
  • U.S. Bank: Individuals with mortgages may qualify for payment suspension of up to 180 days with no late fees, and an additional 180-day extension if requested through their online accounts or by calling 855-698-7627.

Other steps you could take now if you can’t pay your loans

Talking with your lender as soon as possible is one of the most effective ways to get immediate payment relief during financial hardship. In addition to setting up payment deferment or forbearance, there are a few other steps you can take if you can’t pay your loans:

  • Apply for unemployment benefits. A presidential action issued by former President Trump on Dec. 27, 2020, extended the Pandemic Unemployment Assistance program through March 13 (through April 5 for some eligible recipients). The program provides an additional $300 weekly benefit for those who are unemployed between Dec. 27, 2020, and March 14.
  • Cut discretionary spending. Review all of your nonessential spending, like dining out, shopping and even having streaming subscriptions. Find areas that you can cut from your monthly budget to free up funds for loan payments.
  • Refinance your loans. If you have strong credit, you might be eligible for current all-time-low interest rates. Refinancing can help reduce your interest rate and lower your monthly payment.

Regardless of what type of loan you’re struggling with, there’s a good chance your lender has options that can relieve some of the financial pressure. The best move is to get ahead of the issue by contacting your lender if you already know you won’t make your next loan payment.

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