Create a Federal Student Loan Repayment Plan
This week, Senate Republicans introduced the HEALTH Act , the party’s latest incentive- softening bill. While the $ 1 trillion plan includes unemployment insurance, direct payments , forgivable Payroll Protection Program (PPP) loans, and more, there isn’t much in it for student loan borrowers. As reported by CNBC , the HEALS Act calls for simplified repayment plans or extended pause in federal payments, but skips new student loan forgiveness programs.
In March, Congress passed the CARES Act , which gave troubled borrowers the option to suspend federal student loan payments until September 30. With less than two months left until the deadline, 40 million borrowers could run into trouble if the next bailout bill doesn’t last. suspended payments. Politico reports that the Ministry of Education is preparing to send a warning to affected borrowers by mid-August.
While some lawmakers are still fighting for additional relief , it could be weeks before the parties strike a deal. Either way, you should start planning for the September deadline. Meanwhile, according to Forbes , there are already existing programs that can help.
Delay due to economic hardship
If you are in serious financial difficulty, you can apply for a deferral due to economic hardship. This program allows you to suspend payments of your federal student loan for up to three years.
To be eligible, you must receive government or state aid, have an income below 150% of the poverty line, and work at least 30 hours a week. If you qualify, the government will pay interest on your subsidized student loans.
Deferral of unemployment
If you are unemployed and looking for work, you can apply for an unemployment grace period. You can qualify for this option in six-month increments for up to three years. This program also covers your interest on subsidized student loans, but not on unsubsidized loans.
Patience
The CARES Act is a form of abstinence that allows you to pause federal student loan payments. If you are not eligible for deferred payment, you can apply for federal deferred payment or explore private deferred payment options with your lender. Federal abstinence can last up to three years, while private abstinence can only provide relief for up to one year, two to three months at a time. During the grace period for a federal loan, the government does not pay any interest.
Income-driven repayment plans
If you earn less than 150% of the poverty line, your federal income-based repayment plan may be zero. The government may pay you the accrued interest for the first three years on an income-based payment plan, and you can see the differences between the plans here .