Student Loans in the News: Relief On Private Student Loans
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.
Do Private Student Loans Qualify for Coronavirus Relief?
U.S. News & World Report
Author Kim Porter writes:
"Because private student loans are not included in the CARES Act, borrowers have two main options: keep making payments or contact the loan servicer if you've been financially affected by the coronavirus.
While the federal government is waiving payments and interest charges for federal student loan borrowers, private student loan borrowers have to ask loan servicers about special financial relief programs. Private lenders typically offer forbearance programs, which allow borrowers to suspend loan payments for about two to three months.
During forbearance, interest may continue accruing, and some lenders "capitalize" the interest. That means they roll it into the unpaid principal, which increases the cost of your loan.
Options such as pausing or reducing your payments lengthens the loan term, which means you'll pay more interest over the life of the loan. That's why Jay Fleischman, a Los Angeles-based student loan lawyer, recommends making payments for as long as you can.
"If you don't have income and you can't make payments, your first line of defense is to contact the servicer," he says. Lenders may offer an extra 30, 60 or 90 days to pay.
But be careful, Fleischman says: "I feel this will put people in a position where they just kick the can down the road a little bit.""
[Read the entire article over at U.S. News & World Report]
24 private student loan lenders that may help you with payments during the COVID-19 outbreak
Author Laura Grace Tarpley writes:
"Borrowers around America are probably stoked their federal student loan payments have been paused until September 30. What are you supposed to do if you have private student loans, though?
The CARES Act's rules for federal loans don't apply to private loans, and each private student loan lender has its own policies regarding payment assistance during this time.
Find out how your lender can help. If your lender isn't on this list, reach out to ask whether it's offering help for people affected by the coronavirus."
[Read the entire article over at Business Insider]
Biden moves closer to Sanders on health care and student debt
The Washington Post
Author Sean Sullivan writes:
"On student loans, Sanders presented a plan last year to erase all existing debt, going well beyond what Biden and other Democratic candidates embraced. Biden said Thursday that his new proposal would apply not just to public university attendees but also to people who attended private historically black colleges and universities as well as underfunded minority-serving institutions.
'The federal government would pay the monthly payment in lieu of the borrower until the forgivable portion of the loan was paid off,' Biden wrote. He said there would be 'appropriate phase-outs' in the program based on income, 'to avoid a cliff.'
In another peace offering to liberals, Biden proposed paying for his student debt plan by repealing a provision in the recent coronavirus legislation that Congress passed and President Trump enacted.
'That tax cut overwhelmingly benefits the richest Americans and is unnecessary for addressing the current COVID-19 economic relief efforts,' he wrote, referencing the disease caused by the coronavirus.'
[Read the entire article over at The Washington Post]