You may be able to suspend your student loan payments

Erik Feliciano , General Assignment Reporter

Due to COVID-19, many people are out of work and being sent home to help prevent the spread of the virus. As a result, money may be tight. 

You may qualify for a temporary suspension of your student loans through deferment or forbearance as a result of being in a financial bind.

There are two things to consider though when using either forms of suspension.

  • In most cases, interest will accrue during the period.
  • Repayment progress will not be made until you resume paying your student loans.

“If you have a loan balance of $30,000 and an interest rate of 6% and you are in forbearance for a year right after you enter repayment, $1,800 in interest will accrue on your loans. If you do not pay that interest, it will capitalize (be added to your principal balance),” according to Federal Student Aid.

As of March 25, information on refunds and offsets has been released. Many borrowers will be receiving aid on their student loans.

“Such withholdings, known as ‘Treasury offsets’, are permitted by federal law and applied toward repayment of defaulted federal student loans. At the same time, the Secretary directed the Department to refund approximately $1.8 billion in offsets to more than 830,000 borrowers. The Department expects the number of borrowers who will benefit from this relief to increase as servicers work through additional offsets in the queue at the time of this announcement,” stated the U.S. Department of Education.

Private collection agencies have also been instructed to halt all collection activities, including phone calls, and issuing collection letters.

While there are a couple of caveats in seeking a suspension of student loans, help is still within reach.

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