Unfortunately, the federal government’s student loan interest waiver and repayment suspension announced in late March doesn’t help 100% of federal loan borrowers.
In fact, about 6 million Federal Family Education Loan (FFEL) borrowers and a sizable fraction of the 2 million people with Perkins loans won’t qualify because of their loan type. And of course, private student loan borrowers aren’t eligible either.
It’s entirely possible that you have some loans that qualify for the coronavirus economic stimulus package and some that don’t — which makes it even more important to confirm your eligibility and understand how to seek relief for your ineligible debt. Specifically, let’s examine two questions:
- Are you sure your loans aren’t eligible for relief?
- How do you handle repayment on loans ineligible for relief?
Thanks to the coronavirus economic rescue bill, your loan servicer will automatically reduce your interest rate to zero and cancel all payments due through Sept. 30 if you have an eligible federal student loan. [Updated Aug. 9, 2021: The interest-free pause on most federal student loan repayment has been extended one final time until Jan. 31, 2022]
Eligible loans include all federally-held Direct loans, including Grad and Parent PLUS loans, as well as most FFELs (which haven’t been granted since 2010). That leaves the following loan types uncovered:
- FFELs guaranteed by the federal government but held by a private entity
- Perkins loans originated by your school
- Private loans granted by banks, credit unions, state-run education authorities and online companies
Undoubtedly, the differences between a federal loan being “held” or merely “guaranteed” is bound to confuse. If you’re not sure what kind of loans you have, start by logging into the Federal Student Aid (FSA) website with your FSA ID to view all your federal loans.
A FFEL loan borrowed before 2010 is unlikely to meet criteria for relief. For any Perkins loans, you could clear up the confusion by calling your loan servicer directly or contacting your school’s financial aid office.
Finally, if you have education debt that doesn’t appear on the FSA website (and therefore isn’t owned or guaranteed by the Department of Education), call your lenders for those missing loans to confirm that your debt to them is categorized as private loans. You can also review your credit report to find the names of these lenders or loan servicers — the information is available for free via AnnualCreditReport.com.
If you have commercial or school-granted loans, you might think you’re out of luck. But there are a variety of ways to still pause or reduce your repayment, receive repayment assistance and generally manage your debt until the economy recovers:
- Contact your lender or loan servicer immediately
- Consider a Direct Consolidation loan for your ineligible federal loans
- Look into refinancing at least your ineligible private loans
- Talk to your employer about pitching in toward payments
- Stay tuned to Student Loan Hero
It’s imperative to speak directly with your lender or loan servicer — not a third party, as that could leave you vulnerable to coronavirus student loan scams.
Of course, your repayment options will depend on your loan type.
For federal student loans ineligible for relief…
You could pause your monthly payments with a deferment or forbearance (unrelated to COVID-19):
- A general forbearance that’s awarded at your servicer’s discretion, based on your financial constraints
- An unemployment deferment if you’ve lost your job
Alternatively, you could lower the monthly payments on your ineligible FFEL debt by enrolling in the Income-Sensitive Repayment plan to cap your dues at a percentage of your annual income. If you recently suffered a loss of income, you could apply for a recalculated (decreased) payment obligation.
Be aware, however, that interest will continue to accrue and capitalize during a forbearance, unless you have subsidized loans. And interest will also build up if you join an Income-Sensitive Repayment plan that lengthens your loan term.
For private student loans…
There are fewer (and usually less generous) options for private loans, but they do exist. These include:
- Economic hardship or disaster-related forbearance: A pause in repayment that’s awarded on a case-by-case basis and doled out in one- to three-month spans.
- Temporary payment reduction: Less common than forbearance, these payment reductions (like those offered by Discover) would lower your monthly dues for a brief period.
- Temporary interest rate reduction: Navient, which services government-held federal loans eligible for the 0% interest rate but also provides ineligible federal and private loans, encourages borrowers affected by COVID-19 to apply for a lower rate.
That said, the options available have expanded as lenders seek to work with their customers during the coronavirus pandemic. You can check out what some of the biggest student loan companies are offering by consulting our list of forbearance options from private student loan companies during the COVID-19 outbreak.
Before agreeing to any changes to your loan agreement, ensure you understand the implications. Interrogate your lender or loan servicer with questions to make sure you understand how interest will pile up during a forbearance, for example. You might also ask about the length of time that a payment reduction could add to your overall repayment term. Then return to Student Loan Hero and use our loan repayment calculators to assess the consequences.
You might have already discovered one workaround for your ineligible FFEL or Perkins loans: grouping them into a Direct Consolidation loan. Besides getting you covered for a portion of the 0% interest and payment-suspension period, consolidation would also deliver a single monthly payment and make you eligible for income-driven repayment (IDR) plans.
Consolidating with Uncle Sam might not be wise in certain cases, though. Here are three potential cons to be aware of:
- It would erase your progress toward the consecutive-payment criteria for a program like Public Service Loan Forgiveness.
- Outstanding interest on your loans will be capitalized (added to your principal loan balance) when you consolidate.
- You’ll likely miss at least the first two months of the government’s six-month payment suspension. While applying for a Direct Consolidation loan takes less than a half-hour, actually receiving it would take a minimum of 30 days, and likely longer.
If you’re on the fence about consolidation, speak with your loan servicer. You can also review our guide about deciding whether consolidation is right for you.
Like consolidation, refinancing would group your student debt into one new loan. But while it still won’t grant you access to the government’s interest-rate freeze and payment suspension, refinancing could reward you with a lower interest rate or a monthly payment (or both) more suited to your ability to repay.
These potential benefits generally make refinancing a great option for your private student loans — all the more so as refinancing companies are now offering relatively low rates after the COVID-19 outbreak prompted emergency rate cuts from the Federal Reserve. If you have strong credit (or have a cosigner who does), you could refinance your existing private debt with a new lender, perhaps one that also offers some coronavirus pandemic refinancing relief.
However, know that there are pros and cons to refinancing, so don’t rush into refinancing (and privatizing) FFEL and Perkins loans that aren’t currently eligible for the federal relief package. The biggest consideration is that once your refinance, any federal loans will lose their government protections, such as IDR and expanded deferment and forbearance options. You also wouldn’t be eligible for any future government relief, unless it applies to private education debt.
If you have federal or private loans that don’t qualify for the student loan interest waiver and payment suspension, now’s the time to bring up your student debt concerns with your human resources department.
As part of the coronavirus economic rescue package, the government gave employers temporary tax relief for contributing up to $5,250 toward their employees’ student loan payments. This benefit is slated to stay until at least Jan. 1, 2021, and it could cover any student debt, whether federal or private.
It’s worth noting that many major companies provide student debt relief already.
Sure, your commercially-held federal loans and private loans are mostly unaccounted for in the government’s new relief package, but they could be affected by future legislation.
As recently as March 19, for example, Congressional Democrats were pushing for $10,000 or more in forgiveness for federal loan borrowers. It’s not clear whether such a plan will come to pass, but the magnitude of it makes it worth keeping an eye on.
We’ll keep you posted on developments via our Student Loan Hero news reports and our Coronavirus Information Center. The FSA website’s updates sometimes lag behind other news sources, but it’s worth bookmarking as well.
Interested in refinancing student loans?Here are the top 9 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.88% – 6.15%1||Undergrad & Graduate|
|1.88% – 5.64%2||Undergrad & Graduate|
|2.50% – 6.85%3||Undergrad & Graduate|
|1.89% – 5.90%4||Undergrad & Graduate|
|1.99% – 6.59%5||Undergrad & Graduate|
|1.88% – 5.64%6||Undergrad & Graduate|
|1.90% – 5.25%7||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|2.13% – 5.25%8||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021.
2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.
Interest Rate Disclosure
Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.48% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions.
Auto Pay Discount Disclosure
You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay.
Student Loan Refinancing Loan Cost Examples
These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License.
One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America.
© 2021 Earnest LLC. All rights reserved.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of April 29, 2021. Information and rates are subject to change without notice.
5 Important Disclosures for SoFi.
Fixed rates from 2.49% APR to 6.94% APR (with autopay). Variable rates from 1.99% APR to 6.59% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
6 Important Disclosures for Navient.
7 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.49% APR – 7.75% Fixed APR with AutoPay.
8 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.