I maxed out (or don't qualify for) the 36-month deferment. What should I do?
Federal student loan borrowers may defer loans for up to 36 months. After that, the best option is to switch to an income-based repayment plan. (You can apply for economic hardship deferments for a 12-month period, then re-apply up to two times.) Contact your loan provider to learn if you've reached the deferment limit, as well as what other options you may have.
This calculator Opens in new window can show you which plan offers the lowest payments. If you have a high debt-to-income ratio, your payments may even be reduced to $0. Graduated (payments that gradually increase every two years) or extended repayment plans also may be available. Ask your loan provider for details.
I have private loans. Should I try to defer them?
Some private lenders are offering temporary deferments, but many still charge interest during this time. Some may also require that you repay the amount deferred in a lump sum once the deferral period is over, which may be difficult with an absent or severely reduced income.
Call your loan provider and ask about your options. Every private lender has their own requirements and rules, and they often vary on a case-by-case basis. Ask what will happen to the amount you owe when the deferment period ends. For example, will you face any special fees or interest rate charges for deferring your payments?
I'm working toward Public Service Loan Forgiveness (PSLF) but lost my job. Am I still eligible?
PSLF Opens in new window is a program available to those with federal student loans. If you work for a qualified nonprofit or government organization and make payments on your federal loans, your remaining balance will be forgiven after 120 payments (your service doesn't have to be in consecutive months). The program was established in 2007 and had its first successful recipients in 2018 Opens in new window.
You can choose an income-based repayment plan, which will usually be the lowest-cost option. Also, you won't owe income tax on the forgiven loan balance.
If you've lost your job, you can defer payments until you get a new one. (For your payments to count toward PSLF, you must be working full time for a qualifying organization Opens in new window. So as soon as you land a PSLF-eligible job, submit a certification form Opens in new window with your new employer's information.)
Should I put my federal relief money toward my student loans?
If you received up to $1,200 as part of the federal COVID-19 relief program, putting the money toward your loans can be a great idea. But first consider your overall finances. For example, how long could you stay afloat without borrowing? If you don't have emergency savings that cover about six months' living expenses, that should be your top priority.
Job stability is also key. If you're self-employed or vulnerable to a layoff, consider saving your relief check even if you have a solid rainy-day fund.
Also consider other debt you may have—especially credit card balances at higher interest rates than your student loans. It's usually best to chip away at those first.
I was on an income-based payment plan, but I lost my job. Can I get a lower monthly payment?
If you're on an income-based repayment plan, you can apply for an updated payment Opens in new window as often as you need. (You'll have to provide proof of your lost income.)
If you get another job and want to increase your payments, you can re-submit the form.
Should I refinance to take advantage of lower interest rates?
One silver lining to this cloudy environment is that interest rates are historically low. If you have private loans, a high credit score and stable employment history, it's a great time to refinance because you may qualify for much lower rates—and payments—than you face today. There's also no limit on how often you can refinance student loans. Even if you did so last year, it may be worth considering again.
Even so, borrowers with federal loans should think twice about refinancing. When you refinance a federal loan, you give up related protections and benefits. Most of these, including income-based repayment options and extensive deferment programs, aren't available with private loans.
For example, as part of the CARES Act Opens in new window, federal borrowers could defer payments until Sept. 30 without accruing extra interest (that deadline was recently extended to the end of the year). Private lenders aren't offering similar options.