During the COVID-19 pandemic, we have to stay positive and optimistic about the future outcome. One way we can help ourselves is by staying well-informed and taking advantage of things we are able to control.
With the passing of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, one of the provisions we want you to be aware of is the forbearance of federal student loan payments until September 30th, 2020.
Federal Student Loans
Those who have federal student loans will automatically have their student loans placed in forbearance until September 30th, 2020, which means you can temporarily stop making payments if you own these loans. In addition to the suspension of required payments, the interest rates were set to 0% on these federal student loans from March 13th, 2020 until September 30th, 2020:
- Defaulted and non-defaulted Direct Loans
- Defaulted and non-defaulted FFEL Program Loans
- Federal Perkins Loans
- Parent PLUS Loans
Strategies to Implement
If you have any federal student loans, recognize that the CARES Act is an opportunity to implement different strategies that will improve your financial picture going forward. With federal loans in forbearance and the 0% interest rate applied these next few months, here are some unique strategies that you may want to consider:
- Use this time to build up an emergency fund or invest money into your 401(k) or IRA.
- If you won’t be paying down your student loans, use this time to make extra payments towards other debt that is accruing interest.
- If you are still working and are not affected by COVID-19, you can continue to pay down your student loans. Your payments will be applied to principal once all of the interest that accrued prior to March 13th is paid.
Private Student Loans
Keep in mind, not all student loans will be in forbearance or will receive the reduced interest rate of 0%. Private student loans are not covered by the CARES Act. To determine if your student loans are in forbearance and the interest rate is set to 0%, please contact your loan service provider.
Currently, there are many private lenders offering forbearance periods due to the economic crisis. If you have any private student loans, consider contacting your loan service provider to see what they can offer.
Contact Us & Additional Resources
Please don’t hesitate to contact us for any questions regarding your federal or private student loans. We are more than happy to provide guidance on the steps you should be taking to improve your financial future. You can reach us by email at advisor@odysseypfa.com or call 770-992-4444.
For additional information regarding you federal student loans click here.