The different COVID-19 student loan relief measures paused federal student loan payments and dropped interest rates to zero percent through December 31, 2020.
While some borrowers desperately need that relief during times of unemployment or unexpected economic hardship, others don’t.
Whatever camp you fall into, don’t let the relief measures—or the coronavirus—get in the way of your plans to manage your student debt.
Below, we have the tips on paying student loans during coronavirus that you need, whether you’re experiencing financial hardship or want to pay off your student loans faster.
For Borrowers Experiencing Financial Hardship
Are you struggling to keep up with your private student loan payments?
Worried about how you’ll manage once federal student loan payments resume?
These tips are for you:
See if You Qualify for Private Student Loan Coronavirus Relief
Several states negotiated with several private student loan lenders to secure coronavirus relief measures for private student debt.
The agreement covers borrowers in CA, CO, CN, IL, MA, NJ, NY, VT, VI, WA, and D.C., and it offers the following perks:
- A minimum of 90 days of forbearance
- Waived late payment fees
- A 90-day pause on debt collection lawsuits
- Accounts reported to credit bureaus as in good standing
- Help with enrolling in other assistance programs
Only borrowers in the qualifying states who borrowed from the following lenders are eligible:
- Aspire Resources
- College Ave Student Loan Servicing
- Earnest Operations
- EdFinancial Services
- Kentucky Higher Education Student Loan Corp.
- LendKey Technologies
- SoFi Lending
- Tuition Options
- United Guaranty, now Arch MI
- Upstart Network
- Utah Higher Education Assistance Authority
- Vermont Student Assistance Corp.
If you think you’re eligible and need the assistance, reach out to your lender.
Talk to Your Lender
Don’t qualify for the relief mentioned above? Talk to your lender to see what they can do for you. Some lenders offer unemployment forbearance, economic hardship forbearance, temporary interest-only payments, or payment plans. It’s up to you to reach out for help.
Refinance Your Private Student Loans
Refinancing your private student loans with your current lender or a new one can lower your monthly payment by extending the loan term or lowering the interest rate. A smaller monthly payment will make your monthly budget more manageable, even as you navigate the financial effects of the coronavirus.
Plus, when you refinance with the best student loan refinance companies, you’ll also get no late payment fees, no upfront fees, unemployment or economic hardship forbearance, and death and disability discharge.
Apply for an Income-Based Repayment Plan
Prepare for when federal student loan payments resume by applying for an income-driven repayment plan.
Income-driven repayment plans help borrowers manage their federal student loan payments by basing what you owe each month on your income. Plus, after a set number of years, you receive loan forgiveness. Read our coverage of the different student loan repayment plans here.
Apply now so that when payments resume, you’re already enrolled and know what you’ll need to pay each month. Plus, the next few months of nonpayment will start to count toward forgiveness under your new repayment plan.
Depending on your situation and the plan you choose, you could end up owing as little as $0 per month.
Already enrolled in an income-driven repayment plan? Recertify on studentaid.gov if you’ve experienced a change in income. It’ll likely drop your monthly payment.
For Financially Stable Borrowers
Have your finances remained relatively unaffected by the coronavirus? Or perhaps you’re working more over-time, so you’re in a better financial situation now than you were before?
If that’s you, now is the time to get serious about paying off your student loans.
The tips below are for borrowers who have the means to pay off their student loans faster despite the coronavirus.
Make the Minimum Payments on Your Student Loans
First and foremost, you need to continue making on-time minimum payments on all of your student loans. Otherwise, you could face default or late payment fees.
Loans that still require monthly payments during the coronavirus include:
- Private student loans
- FFEL Loans not backed by the ED
- Perkins Loans not backed by the ED
- HEAL loans not backed by the ED
Next, Focus On Your Loans with the Highest Interest Rate First
Next, you should put any extra money you have each month on the loans with the highest interest rate.
Loans with the highest interest rate—even if they have a smaller loan amount—are your most expensive loans. Since your qualifying federal student loans have a zero percent interest rate through December 31, 2020, your privately held student loans have the highest interest rate.
Use the unbury.me Debt Calculator to Help
We recommend using the unbury.me debt calculator to keep track of which loans to pay off first.
Create an account and then plug in the loan amounts, the interest rates, and the minimum monthly payments for all of your student loans. Choose the total amount of money you can put toward your loans each month, including the minimum payment. Select “Highest Interest Rate (Avalanche)” for payment plan type.
The calculator will display an estimate of when you’ll become debt-free and how much interest you’ll end up paying. You can also view the names, loan amounts, and interest rates for each loan entered so that you know which to pay off next.
Continue Paying What You Did Before Relief Measures Kicked In
You don’t have to make the minimum monthly payment on your federal student loans until at least January 1, 2021. But, up until the CARES Act passed in March 2020, you were planning to make those payments each month.
Continue putting at least the same amount toward your loans each month as you did before the coronavirus student loan relief measures kicked in. Just allocate the funds differently.
For example, if you normally spend $200 on federal student loan payments and $300 on your private student loans, continue spending at least $500 each month on loans. Pay $300 for the minimum monthly payments on your private student loans and then put the $200 on whatever loan has the highest interest rate.
This strategy keeps your budget the same while maximizing the benefit of your loan payments.
Refinance Your Private Student Loans
If you haven’t recently refinanced your private student loans, now is the time to do so.
Refinance rates are at all-time lows, making it easier than ever to secure a lower interest rate on your refinanced loan.
Just by refinancing, you can reduce the time and the amount of money it will take to pay off your loans in full. That’s without even putting any extra money on them each month.
Refinancing can also come with perks like unemployment forbearance, economic hardship forbearance, and death and disability discharge. The coronavirus has shown us just how important having benefits like those are.
What to Do Before Paying Down Your Student Loans During the Coronavirus
Aggressively paying down your student loans will get you out of debt faster, freeing up your future earnings for other financial goals. However, before committing to paying extra on your loans, you should do the following:
Look Out for Prepayment Penalties
Check the terms of your privately held student loans to see if there are any prepayment penalties. If there are, refinance your loan with a lender that doesn’t charge prepayment penalties. That way, you can pay off your loan as fast as you want without fearing any fees.
Evaluate Your Emergency Fund
An emergency fund covers unexpected costs like medical bills, car repairs, home repairs, etc. It also can cover living expenses should you lose your job. Losing your job might have seemed like a longshot last year, but it’s becoming an unexpected reality for many Americans due to the coronavirus.
Do you have an emergency fund? Is it enough?
Dave Ramsey, a renowned money expert, suggests only saving $1,000 for a starter emergency fund and then waiting until after you pay off your debt to fund a larger one–mortgage excluded. The full emergency fund should contain at least three to six months of living expenses.
However, due to COVID-19, you might feel more secure building up a larger emergency fund before focusing on your debt—especially if you support multiple people or feel your job is at risk.
If you need to start or build your emergency fund, do that before proceeding with aggressively paying off your student loans. Just make sure you continue to make all minimum monthly payments.
Consider Your Other Debts
What other debt do you have? A mortgage? Credit card debt? A car loan?
If you have other debt, you may want to refrain from focusing solely on paying off your student loan debt. After making minimum student loan payments and other minimum payments on debt, put any extra money you can toward the debt with the overall highest interest rate. It usually ends up being credit card debt.
The good news is that by paying down your credit card debt, you’ll make it easier to refinance. Why? When you pay off credit card debt, your credit score improves. The better your credit score, the easier it’ll be to refinance your student loans at a low rate.
The Bottom Line: Tips on Paying Student Loans During Coronavirus
Paying off student loans isn’t a one-size-fits-all process, especially during times as unpredictable as the coronavirus. Consider your financial situation, job security, other debt, and family as you navigate managing student loan payments or aggressively paying off student loans during the pandemic.
Compare the Best Student Loan Refinance Rates
Here are our top student loan refinance picks for 2019
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. (2)$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. (3)This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 1/27/2021. Variable interest rates may increase after consummation.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
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.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). 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.
Splash Financial: 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.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate 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 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
Ascent: Ascent’s undergraduate and graduate student are funded by Bank of Lake Mills or DR Bank, each Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentFunding.com/Ts&Cs. Rates are effective as of 12/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized bank account each month. For Ascent rates and repayment examples please visit: AscentFunding.com/Rates. 1% Cash Back Graduation Reward subject to terms and conditions. Cosigned Credit-Based Loan student must meet certain minimum credit criteria. The minimum score required is subject to change and may depend on the credit score of your cosigner. Lowest APRs require interest-only payments, the shortest loan term, and a cosigner, and are only available to our most creditworthy applicants and cosigners with the highest average credit scores.
*The minimum amount is $2,001 except for the state of Massachusetts. Minimum loan amount for borrowers with a Massachusetts permanent address is $6,001.