Student Loans in the News: COVID-19 Relief and Your Credit Score
A brief round-up of recent articles and blog posts that discuss current student loan debates and data
About the author: Kevin Mahoney, CFP® is a Millennial financial expert and fee-only financial advisor in Washington, D.C. Kevin's work with his clients focuses on paying off student loans, buying a house, investing savings, and budgeting. Kevin is the founder & CEO of Illumint, a virtual financial planning firm specifically designed to help couples and young families with their financial decisions.
How COVID-19 Payment Accommodations May Affect Your Credit
The Associated Press
Author Bev O'Shea writes:
"In a financial crisis, access to credit is the next best thing to a fat emergency fund. If you protect your credit, you’ll have more or better options when you need them, such as being able to qualify for a low-interest loan.
The most important factor for protecting your credit is not missing a payment. A payment that’s more than 30 days late can cause your credit score to plummet, and the mark can stay on your reports for seven years. Your score could also drop if you are using more of your credit limits, but that damage is more quickly fixed. Your score will rebound once you can pay balances down."
[Read the entire article over at The Associated Press]
A direct subsidized loan is the best kind of student loan you can get
Author Clint Proctor writes:
"A subsidized loan is a federal student loan that is available to undergraduate students who have a financial need. The biggest advantage of taking out subsidized loans is that the Department of Education will pay your interest charges for you while you're in school and during your grace period.
Since unsubsidized loans do not come with this interest subsidy, they continue to accrue interest during all periods. Student borrowers can choose to pay the interest on their unsubsidized loans while they're in school. But if they don't, all unpaid interest will be added to the principal once repayment begins.
While in-school student loan interest assistance is a huge plus for subsidized loans, not every student will qualify for them. Unlike unsubsidized loans, you must demonstrate a financial need to receive any subsidized loan distributions. And graduate and professional students are not eligible for a subsidized loan whatsoever, regardless of their financial situation."
[Read the entire article over at Business Insider]
Financial relief available to New Jersey residents struggling to repay private student loans
Author Pat Ralph writes:
"New Jersey residents having difficulty repaying their private student loans – and who did not qualify for aid under the $2 trillion coronavirus stimulus package – will now be eligible for financial assistance from the state.
About 200,000 New Jersey residents with private student loans are expected to benefit from this initiative, Gov. Phil Murphy said Tuesday. The CARES Act only provided financial relief options for those who hold student loans owned by the federal government.
Some of the measures being offered to help private student loan holders during the COVID-19 pandemic include a 90-day minimum of forbearance relief, late payment fees waived, the assurance of no negative credit reporting of any borrower, the stoppage of debt collection lawsuits for 90 days, and providing eligible borrowers with other applicable programs in which they can enroll.
Borrowers must contact their student loan providers to identify which options are most appropriate for their circumstances, Murphy said."
[Read the entire article over at Philly Voice]