Managing Student Loan Debt during COVID—19

Managing student loans during covid 19

Coronavirus is impacting all aspects of our life, and, yes, the higher Education as well. It is forcing a lot of people to reconsider their monthly budget. Many people are facing hard decisions to reduce income, and this pandemic is forcing people to take a close look at their spending.

Breathe in. Breathe out. We know that there is a great deal of uncertainty as the world is facing the difficulties and real factors of COVID-19. While a significant number of people are working remotely, moving to online schooling, and have postponed numerous aspects of their life. The past few weeks have brought serious changes that have confused many student loan borrowers about what would happen to their payments.

Many graduate students are looking for alternatives to repay their debt. In this post, I am going to give you all the basic details and assist you what to do with your loans in this pandemic situation. There is a lot to digest; however, there are certain ways where you can pay your student loan debt. There are two types of loans:

Private and Federal Loans:

The two significant categories of student loans available today are Private student loans and Government student loans. Federal student loans are received from the government that consists of approximately 90% of education debt, whereas private student loans are acquired through private financial organizations such as banks and credit unions.

On March 13, as a reaction to coronavirus the Federal government declared a pause on student loan interest. As a result, student loan interest will freeze, meaning that interest won’t collect specific loans until the situation gets better, and policy will not change. There is no need to make payments on federal student loans until Sep. 30, 2020. It was reported on Friday, 20th March that for the next 60 days, all the federal student loan borrowers now have a choice to suspend their monthly payments. These payment suspensions and reductions are just applied to the Federal loans.

Many bankers have started making exceptional offers for the existing borrowers to offer relief from the pressure of COVID-19. Today many student loan companies

have responded in different ways because of the crises of COVID-19. There are other relief options to consider, like refinancing all of your student loans if you have private, federal, private or both types of loans.

Loan Refinancing:

A good way to manage the debt during such type of crises is Loan Refinancing. You need to pay off your existing student loans with a brand new one, when you refinance your student loans. As a result, this will permit you to explore better interest rates, terms or lower your monthly payments that more likely fit your budget. Refinancing is done through private bankers or credit associations.

How can Refinancing give benefits during these crises?

Paying off loans to students is not as easy as it sounds. Before getting a highly paid job related to your major, you may have to work on a less profitable job for a while or work for longer hours. Particularly now, it’s really a crucial time to reevaluate your financial situation, as many are facing cutbacks or losing employment completely. It is mandatory to explore different options such as federal benefits or options from private lenders.

Reasons for Refinancing:

It is not the only repayment option for borrowers, but it absolutely has its advantages. Let’s look at different reasons to refinance your student loans.

  • Lower financial costs.
  • Reduced monthly payments
  • Reduced hassle
  • Release a cosigner
  • Existing loans can be improved