What to do with your private student loans during the coronavirus crisis

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With the coronavirus triggering mass layoffs, many people across the U.S. have recently lost a reliable source of income. And while there are policies designed to help people financially weather the crisis, including programs that can help borrowers suspend student loan payments, these programs remain a source of confusion.

Federal student loan borrowers can access certain federal relief programs, but there are still options for people with private student loans. If you’re concerned about making your next payment on a private student loan, here’s some updated information on what you can do.

Does the CARES Act apply to private student loans?

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law March 27 and worth roughly $2 trillion overall, provides some relief for federal student loan borrowers. The bill allows borrowers to suspend payments on federal student loans for six months, from now through September 30, 2020, and automatically waives interest during this time frame. This means that if you elect to suspend payments now, your loan balance will be exactly the same when you resume payments later on. Additionally, the Department of Education has suspended collection attempts and wage garnishments, Social Security offsets and tax refund seizures on defaulted federal student loans.

Here’s the most important part for private student loan borrowers: These benefits apply only to student loans held by the federal government. Private student loans, Federal Family Education Loan (FFEL) Program loans owned by commercial lenders and Perkins Loans held by your school are not eligible for these benefits. The law also does not provide for the $10,000 in student loan debt forgiveness — for any student loan borrowers — that was initially proposed during congressional negotiations.

If you have a private student loan, your options are to continue making your payments on time or to contact your loan servicer about hardship options.

How to find loan relief for private student loans

Help for federal student loan borrowers is automatic, so you won’t need to contact your servicer about postponing payments and waiving interest unless you have questions. But every private lender and loan servicer is offering different relief options. Here’s how you can request help:

  1. Call your loan servicer. Below, we’ve listed 10 private lenders and loan servicers and how to reach them. When you call or email your loan servicer, explain your financial situation and how you’ve been impacted by this crisis. For example, you or your partner may have been laid off or furloughed, or you might have concerns about your future ability to make your student loan payments. Tell your lender when you anticipate being able to resume loan payments.
  2. Ask about assistance programs. Your options will depend on the servicer and your individual situation. For example, your loan servicer may offer to suspend payments for a few months, temporarily lower your interest rate or offer interest-only payments. Some servicers are treating each situation on a case-by-case basis.
  3. Ask questions. Before agreeing to start the program, confirm the exact terms, such as fees involved, how long the relief lasts and whether interest accrues. You also should find out whether that accrued interest “capitalizes,” which means it’s added to the unpaid principal balance. Create a plan for how you’ll resume payments at the end of the forbearance period.
  4. Enroll in your loan servicer’s program. Ask for the details in writing and complete the process to enroll in your loan servicer’s program. Make sure you receive confirmation that you’ve been enrolled.
  5. Consider refinancing. As interest rates drop, it’s getting cheaper to refinance private student loans. Shop around for the best rate if you’re considering this move. Refinancing can help you save a substantial amount of money if you can shave a percentage point or two off your current interest rate. It can also help if the new lender offers more flexible hardship options than your current lender.

While you’re not required to make payments during forbearance, it may be a good idea to do so if you can afford it. Enrolling in plans that suspend or lower payments ultimately extends the life of the loan, which costs you more in interest overall.

Private student loan lenders offering relief

Below is a list of private lenders that are offering some kind of relief to borrowers as of April 1, 2020. If your lender is not listed here, we recommend checking your lender’s website or reaching out by phone.

  • Citizens Bank says that private student loan borrowers who are experiencing financial hardship can call the bank at (888) 411-0266 or reach out to their loan servicer.
  • College Ave borrowers may temporarily suspend their student loan payments for up to three months through a disaster forbearance program. To request this type of forbearance, send an email to servicing@collegeave.zendesk.com that includes the loan ID, your name, your birth date and a request to postpone payments. The lender says that it processes requests within five business days and will send a confirmation email. Interest will continue to accrue on your loans, but it won’t be capitalized.
  • CommonBond borrowers can apply for natural disaster forbearance, which won’t count toward standard forbearance limits. The online lender is waiving late fees and allowing private student loan borrowers to postpone payments through the end of the national emergency declaration. Loans will continue accruing interest, but you won’t pay fees to join the program.
  • Discover private student loan borrowers can call the bank at (800) 223-5614 to discuss hardship options.
  • Earnest borrowers can apply for a three-month payment suspension through a disaster forbearance program. You can reach out via Earnest’s email portal or call (888) 601-2801. When you contact the company, provide details of how you have been financially impacted, the industry you (or other household members) work in and an idea of when you can resume payments on your loan. Interest accrues while your payments are postponed, but it won’t be capitalized at the end of forbearance.
  • Laurel Road private student loan borrowers who are financially impacted by the coronavirus can reach out to MOHELA, which services Laurel Road’s loans. Call (877) 292-6845 to discuss hardship relief options, including forbearance or an extension. Laurel Road allows for forbearance for up to 12 months over the life of the loan.
  • LendKey, which partners with banks and credit unions to help borrowers refinance student loans, says that borrowers can reach out via email at care@lendkey.com. You may also call your loan servicer with questions and to discuss hardship options.
  • Navient, which services federal and private student loans, says that qualified borrowers can request up to three months of disaster forbearance by calling (888) 272-5543. Interest will accrue but won’t be capitalized at the end of the forbearance period. Navient also offers other hardship options to private loan borrowers, including a rate-reduction program, interest-only payments and an extended-repayment plan.
  • Sallie Mae borrowers can chat with the lender about private student loans online or by calling (800) 472-5543. Forbearance may be available in three-month increments for a total of 12 months over the life of the loan. During these periods, interest will continue to accrue and will capitalize on the balance.
  • SoFi borrowers can apply for a 60-day forbearance during the coronavirus, with the option to extend.

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