On Friday U.S President Trump announced that the administration is waiving student loan interest immediately until further notice. There is not a lot of information out there on what this means for us with student loans but this is what I found. We will also know more in the upcoming week as the Student Loan companies attempt to apply this.
So, without further ado, here we go.
Things to know:
- You have to have a federal student loan or a loan that is held by a federal government agency, like the Department of Education or their contracted providers. Unfortunately, those that hold private student loans are not eligible, as well as some types of federal student loans. We will find out more about who is eligible or not.
- The interest accrual will be frozen. This seems to mean that you can pay down your balance and knock out some of the outstanding interest. This will still have to be paid in full before paying down the principal.
- It is only temporary, so it could last for 2 weeks or 6 months. Although, I hope that they will at least lower the percentage rates since Congress has the ability to do so.
- You will have to continue paying as normal, this is not student payment relief.
Ultimately this will pause balance growth. However, those who have lost income due to this outbreak will not (so far as we know) will receive any direct student loan relief.
What can you do?
- Try and continue paying as normal. If you cannot, talk to your servicers about Income-based repayment options. I have this and I have a low monthly payment.
- Try to pay off any capitalized interest, so most of your future payments can attack the principal.
The situation is evolving, so I will be back with more information.