Here’s what to do if Congress doesn’t extend student loan relief:
Trump Signs Executive Orders: Extends Federal Unemployment Benefits At $300 Per Week, Protects Against Evictions, Defers Student Loan Payments, Suspends Payroll TaxDeferments and forbearances are programs that allow borrowers to pause payments on their student loans but remain in good standing during times of economic hardship.
Typically, interest still accrues on all student loans during a deferment or forbearance, except for certain subsidized federal student loans. And that interest can periodically capitalize — meaning it would be added to the principal loan balance. This can lead to significant balance increases over time, which borrowers should be aware of. are available for many federal student loan borrowers.
Federal student loan borrowers who are currently not in an income-driven plan can apply to switch into one of these plans due to changed circumstances . Income-driven repayment programs may be better solutions in this type of hardship situation than a deferment or forbearance, since the plans are renewable year after year.
Student loan borrowers already on an income-driven plan can request a recalculation of their monthly payments at any time due to job loss or a reduction in income. So if your monthly payment is based on your outdated income information or last year’s tax return, you can submit a new application now to recalculate your monthly payments based on your current financial picture.
Private student loans generally have fewer options than federal student loans do during times of hardship. There usually is no income-driven repayment program, and deferments and forbearances are much more limited.lenders will temporarily modify and reduce monthly payments based on financial hardship.
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