Credit relief during the coronavirus pandemic

With the Delta variant sparking another spike in COVID-19 cases, the pandemic continues to play a role in the country’s economy, making the recovery more sluggish than expected. Only 235,000 jobs were added to the economy in August, a significant slowdown compared to expert projections.

For some U.S. workers, the dragging pandemic means ongoing financial uncertainty. For those struggling to keep up with their debt, there are relief options from banks, lenders, and the federal government. If you are unable to pay your loans, or are soon unable to pay, one of these programs may be able to help.

Federal Student Loans

In August, the US Department of Education extended the federal student loan payment hiatus to January 31, 2022. The hiatus was due to expire on September 30, 2021, and the government has made it clear that this will be the final extension. For an additional four months, federal student loan borrowers and borrowers in defaulted Federal Family Education Loan (FFEL) program can avail of various relief measures

Interest waiver

Federal student loan interest rates will remain at 0 percent through January 2022. Borrowers do not need to do anything to implement this. However, be sure to check your student loan statements every month to make sure your federal loans are free of interest until January.

Suspension of payment

Federal student loan borrowers also have extended relief when it comes to monthly student loan payments. Department of Education direct loan payments will be suspended until January 31, 2022. This suspension of payment also takes place automatically.

This suspension won’t make your student loan debt go away, but it does allow you to save on monthly payments through January. If you are working towards public sector loans, you will continue to receive credit during the suspension period if you work full-time for a qualified employer.

Borrowers can also choose to continue making payments during this temporary deferral. If you choose to continue with your regular student loan payments, all of your payment will be applied to your principal balance, which will help you settle your debts faster.

If you are using automatic payments, these may have been automatically suspended at the beginning of the deferral period. Contact your servicer if you want to start the automatic payments again.

Suspended collection activities

The collection activities for federal student loans have been suspended since March 2020, defaulted loans from the federal FFEL program were added to the list of eligible loans in March 2021.

For borrowers who have been in default on FFEL loans since March 13, 2020, their seized wages and tax returns will be automatically restored, their defaulted accounts will be revised, and refunds will be made for any voluntary payments made since that date up to Offered January 31, 2022.

Private student loans

The private student loan debt is not covered under the presidential move – there are no government safeguards obliging private lenders to waive interest or defer payments on behalf of borrowers.

However, your home lender may offer a hardship program or temporary deferral of the student loan. For example, Earnest offers short-term deferral of student loans for eligible borrowers upon request.

If you can’t pay your personal student loans because the pandemic has affected your income, contact your lender right away. Note that eligibility for compassionate use programs varies from lender to lender.

Personal Loans

Many banks waive fees and help consumers stay on course with their loans despite a loss of income. For example, Marcus at Goldman Sachs lets customers defer payments on their personal loans for a month without interest.

If you are unsure whether your lender offers personal loan assistance, contact them directly to inquire. New programs can be announced on an ongoing basis. So check regularly to see if help is available.

Home loan

Homeowners with home loans should contact their lenders if payments cannot be made on time. Some financial institutions offer temporary home loan deferral to eligible individuals.

For example, Bank of America offers a three month or longer grace period if your income has been impacted by the coronavirus pandemic. If you are having trouble keeping track of your home loan, give your lender a call to learn more about your options.

List of lenders who offer credit relief

Many lenders continue to provide relief as the pandemic drags on. The following list is not exhaustive. Contact your lender for details about the compassionate use programs they offer.

  • Bank of America: Deferred payment for home loans is possible on request.
  • Fifth third bank: Mortgage customers can request up to 180 days of deferred payment without late fees and up to an additional 180 days via an online portal or by calling 877-366-5520.
  • Marcus from Goldman Sachs: Marcus’ customer care program enables borrowers to defer loan payments for one month using an online interest-free form.
  • PNC: With auto loans, personal loans, mortgages, home equity loans, or lines of credit and student loans, the bank provides temporary hardship support to qualified customers. Customers can use an online portal or call a representative.
  • TD bank: The TD Cares program provides leniency to eligible customers with mortgage, home loan, or lines of credit. Borrowers participating in the program are not required to make any payments for the duration of the forbearance plan. Customers can learn more by calling a representative at 800-742-2651.
  • S. Bank: Those with mortgages can qualify for up to 180 days of payment suspension with no late fees and an additional 180 days extension if requested through their online accounts.

Other Steps You Could Take Now If You Cannot Pay Your Loans

Speaking to your lender as soon as possible is one of the most effective ways to get instant payment relief in times of financial distress. In addition to setting up a deferred payment or deferral, there are a few other steps you can take if you cannot pay your loans:

  • Apply for unemployment benefit: The American Rescue Plan Act of March 2021 increases the total number of weeks individuals can receive pandemic unemployment benefits to 73. It also provides an additional $ 300 weekly benefit for those who are unemployed by September 6.
  • Reduce discretionary spending: Look at all of your unnecessary expenses, such as: B. Restaurants, Shopping, and Streaming Subscriptions. Find areas that you can cut from your monthly budget to free up money for loan payments.
  • Refinance Your Loans: If you have strong credit, you may be eligible for the current low interest rates. Refinancing can help lower your interest rate and lower your monthly payment.
  • Consider a Coronavirus hardship loan: For some banks and credit unions, coronavirus hardship loans are short-term loans that typically have low or no interest rates. While the loan amounts are not very large, these loans come with favorable terms for borrowers.

Regardless of the type of loan you’re struggling with, a good chance your lender has options that can alleviate some of the financial pressures. It is best to contact your lender if you already know you will not be able to make your next loan payment.

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