If you have a federal student loan, you can now pause payments and pay no interest through the end of 2020. But this measure won't help if you have private student loans and can't make payments because of the coronavirus.
Luckily, some states have reached agreements with private student lenders to aid borrowers. And certain loan servicers are voluntarily extending their own forbearance programs.
Here's what you need to know if the pandemic has affected your ability to repay your private student loans.
Can You Suspend Payments on Your Private Student Loans?
If keeping up with your payments is challenging because of COVID-19, you can:
Check for student loan relief in your state. A multistate coalition -- and, separately, New York -- negotiated a relief agreement with more than a dozen lenders and loan servicers. Under this agreement, lenders and servicers say they will:
-- Offer at least 90 days of forbearance to borrowers
-- Waive late payment fees
-- Stop debt collection lawsuits for 90 days
-- Help enroll borrowers in other assistance programs
These protections apply if you have private loans, commercially held Federal Family Education Loans or privately held Perkins loans. But you will also need to check that your loan servicer and your state are participating. You are covered if you live in California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, New York, Vermont, Virginia, Washington or Washington, D.C.
Protections aren't automatic, though, and you will need to contact your loan servicer to request them. Participating servicers include:
-- Aspire Resources
-- College Ave Student Loan Servicing
-- Earnest Operations
-- Edfinancial Services
-- Kentucky Higher Education Student Loan Corp.
-- LendKey Technologies
-- Higher Education Loan Authority of the State of Missouri
-- SoFi Lending
-- Tuition Options
-- United Guaranty, now Arch MI
-- Upstart Network
-- Utah Higher Education Assistance Authority
-- Vermont Student Assistance Corp.
If you've already received relief but could use more help, reach out to your loan servicer about other options, says Chasse Rehwinkel, acting director of the Illinois Division of Banking. But before you enroll in any hardship program, ask your loan servicer how it will affect your loans in the long run, says Leslie Tayne, a New York-based debt settlement attorney.
Also, keep in mind that the multistate group plans to ask participating loan servicers to extend protections for private student loans, especially now that President Donald Trump suspended federal loan payments through Dec. 31.
Check your state's debt collection process. Some states are pausing debt collections and wage garnishments for some types of debt. That means the lender won't be able to take legal action if you're behind on payments.
Head to your state's revenue website to see if it has guidelines on student loan debt collection. Kentucky, for example, has suspended all enforced collection actions on debt, including student loans.
Consolidate your FFEL and Perkins loans. You could consider combining FFEL and Perkins loans into a federal direct consolidation loan, which shifts ownership to the Department of Education. The new loan then qualifies for suspended principal and interest payments through the end of 2020.
Before you make this move, call your loan servicer to confirm that your loans are eligible for consolidation, and ask how your loan terms will change.
Your loan balance, repayment term and interest rate may all increase, which costs you more money in the long run. Consolidation also resets the clock on loan forgiveness.
[Read: Best Private Student Loans.]
How Are Private Lenders Helping Borrowers?
If you're struggling to pay your private student loans, your loan servicer may be able to help. Start by checking your servicer's website for information on COVID-19 relief.
"Even if your loan servicer doesn't list or offer COVID-19-related assistance on their website, it doesn't hurt to contact them and ask if any forbearance or rate reduction programs are available," Tayne says.
Private lenders typically offer forbearance programs, which allow borrowers to suspend loan payments for about two to three months.
Interest may continue to accrue during forbearance, and some lenders capitalize the interest. That means they roll it into the unpaid principal, which increases the cost of your loan.
Forbearance cannot stop interest charges but can help you avoid late fees and damage to your credit history. A forbearance will show up on your credit report but will not hurt your credit score.
Whether you are hoping to obtain a forbearance or seeking other types of relief, here's what some lenders are offering now:
-- CommonBond is waiving late fees and allowing private student loan borrowers to postpone payments through a natural disaster forbearance program. You can pause payments until the end of COVID-19's declaration as a public health emergency, and this won't count toward your lifetime forbearance limits. You'll pay no fees to participate in the program, but interest will continue to accrue on any loans in forbearance.
-- Earnest discontinued its natural disaster forbearance program at the end of June. Now, the lender helps eligible borrowers bring delinquent accounts into good standing and allows a pause in payments for at least one month. You may be able to make interest-only payments for up to three months or apply for a 12-month hardship forbearance.
-- Navient also discontinued its special administrative forbearance program at the end of June. Eligible borrowers can work with the lender to bring accounts current and postpone payments for at least one month. The lender may also lower your interest rate and monthly payment, enroll you in an interest-only payment program, or extend your repayment term.
-- Sallie Mae borrowers can enroll in a hardship forbearance program in three-month increments for up to 12 months total. If you've already requested a COVID-19 forbearance and need further help, you can chat with the lender online or call 800-472-5543 to discuss your options.
-- SoFi allows borrowers to apply for up to 60 days of forbearance, with the option to extend for 30 days. That's three months total of forbearance. If you're still facing hardship, SoFi may help you find other solutions, such as its unemployment protection program or economic hardship forbearance.
Will the Interest Rate Change on Your Private Student Loan?
The Federal Reserve, which cut its benchmark rate to near zero when the pandemic hit, has said the rate will remain near zero through 2022.
If your private student loan has a variable interest rate, your borrowing costs will move in tandem with a benchmark rate. When the benchmark falls, that means your payment may follow suit.
You could permanently lower your loan's rate by refinancing, but you'll need good credit and stable income, Tayne says.
"With the job market still in flux, you may want to consider refinancing now if you're still employed," she says. "Being unemployed may make it more challenging to refinance."
Other Ways to Manage Your Private Student Loans
Certain moves may help you make your private student loan payments if your income drops during the coronavirus pandemic. After you talk with your loan servicer, consider these options:
Refinance your student loan . Refinancing lets you borrow a lump sum, pay off your original student loan and then pay down the new loan. Ideally, you'd find a lower interest rate to save money or switch from a variable interest rate to a fixed rate for a more predictable payment.
Whether you should refinance depends on the type of student loan you have and whether you qualify for better loan terms. For example, "Taking a federal student loan and refinancing into a private student loan isn't always advisable," Tayne says.
That's because federal student loans come with several borrower protections, such as flexible repayment options and coronavirus relief benefits. But if you have a private student loan, then refinancing into a new loan with better terms can be a no-brainer.
Ask your employer about loan repayment assistance. The COVID-19 rescue package allows employers to provide up to $5,250 tax-free to employees through Dec. 31 for student loan payments or tuition assistance.
This is good news for private and federal student loan borrowers as well as employers. Borrowers won't owe income taxes on employer contributions, and employers get a break on payroll taxes.
Check whether your employer offers student loan repayment assistance benefits or plans, too, Tayne says. These could help you continue payments during this stressful time.
Reallocate your student loan payments. You may have a mix of private and federal loans if you have more than one student loan.
If you pause federal loan payments and you can afford to do so, redirect that payment money toward your private student loans, says Jay Fleischman, a Los Angeles-based consumer protection lawyer with Shaev & Fleischman.
"Look, every couple hundred bucks counts," he says. "If you're able to pay down some of the principal on your private student loans, that will be a longer-term savings."
Keep your priorities straight. Make your private loan payments for as long as you can, and reach out to your loan servicer if you're struggling with lost income or financial uncertainty. You may have to prioritize your bills.
"If the servicer is not willing to do anything, and your income truly won't allow you to keep a roof over your head, food on your plate and still pay the private student loans, then you've got to take care of yourself first," Fleischman says. "When (the coronavirus crisis) ends, then you can worry about picking up the pieces and putting things back together financially."