With help from the coronavirus stimulus, you can now pause the payment of your student loans for 6 months. The CARES Act, passed and signed into law this week, allows for the pause of student loans. The CARES Act addresses one of the most frequent questions we receive from clients. A frequent question is about how to handle their student loans along with their other debt. Generally, we discuss repayment options such as Income Based Repayment, Income Contingent Repayment, Forbearance, and Deferment Options. Also, Chapter 13 provides options in the repayment of student loans while discharging debts such as credit cards and personal loans.
Immediate Help: The CARES ACT pauses student loan payments for 6 months. The Act also prevents the addition of student loan interest and stops any debt collection for students who are or were in default. The Act addresses one of the biggest concerns borrowers have during the Coronavirus Pandemic of how to pay their student loan payments while having a reduction in income. Now borrowers can seek a pause of payments by contacting their servicer directly. The pause, at this time, will last through September 2020. Borrowers who are current or delinquent in their payments qualify under the CARES Act.
Now should you pause your student loans?
If you are unable or decide, to not pay your federal student loans there are several things you should know. You won’t be charged any interest since your interest rate is 0%. Therefore, no student loan interest will accrue against your loans. You will not receive any late fees or penalties for non-payment. It’s important to know that the federal government is not paying your federal student loans during this period. When this pause period ends, you will still have to pay your same student loan balance before payments were suspended. So this pause is optional, not mandatory.
If you have the financial resources you don’t have to stop paying your federal student loans. Interest is at 0%, so you could pay off your loans faster. If you choose to keep paying your federal student loans, your monthly payment does not change. Your full payment will be applied to the principal balance only. Again, if you have financial resources, these six months are an opportune time to chip away at your student loan balance, with no interest. Payments during this 6 month period could really pay off and reduce your balance.
Our unique team of attorneys, CPAs, accountants, and professional staff are here to help. We have local offices in Greensburg, Latrobe, and Johnstown. We always offer free consultations to any debt relief clients. Call today!