What to do now that Trump has suspended interest payments on student loans
Amid appeals for relief from student loan borrowers during the coronavirus pandemic, President Trump announced on Friday that the government would forgo interest payments on federal student loans for the foreseeable future.
“I have waived interest on all student loans held by federal government agencies, and it will be until further notice,” Trump said in a declaration of national emergency.
It is not known exactly which loans apply under this waiver, and the White House did not issue an executive order until 5:00 p.m. ET on Friday. It is also unclear whether interest will continue to accrue during the deferral period and have to be repaid later.
Treasury Secretary Steven Mnuchin said earlier on Friday that the administration was also considering suspending payments.
If you’re still working and your finances haven’t been affected by recent events yet, it’s best to keep making payments on time, says Elaine Rubin, Senior Contributor and Communications Specialist at Edvisors.
“The interest waiver does not relieve the obligation to make your monthly payments – further advice or clarification would be needed from the government,” she said.
And if you’re not facing financial hardship, Rubin says use the situation to your advantage.
“Now might be the time to aggressively attack your student loans,” she says. “If you don’t pay interest, this is your chance to have an impact on your student loan balance.”
That said, if you are facing economic hardship or unemployment, you may be able to defer your federal student loan payments as a last resort. Interest never accumulates on your federal subsidized loans for a period economic difficulties postponement, and payments will be postponed. Just know that if you are on your way to student loan forgiveness, a deferral will put you on the right track.
You may also be eligible for an income-based repayment plan, which may reduce your payments now. Some borrowers don’t pay anything.
“Suspending or forbearing your loan can be done over the phone,” explains Rubin. “If you’re not good enough to have the conversation, you can make the phone call with someone you trust. Your loan officer will likely only need your permission to speak to a third party on your behalf.”
Some private lenders also allow temporary deferrals in certain cases. If you’ve always made your payments on time, call your loan provider and ask what options are available to you during tough times.
To verify: The best credit cards of 2020 could net you over $ 1,000 in 5 years
Don’t miss: The most important things to do with your money during the coronavirus outbreak, according to 5 financial advisers