U.S. COVID-19 student loan relief is ending. How to get more time to delay repayments

Federal student loan payments and interest have been paused since March due to the coronavirus pandemic, but payments are set to resume in January, according to the U.S. Department of Education.

National student loan debt has reached over $1.77 trillion as of Tuesday, according to the nonprofit Student Debt Crisis. The pandemic doesn’t appear to be ending anytime soon, but there are ways borrowers can seek additional relief if they are facing hardship into the new year.

President-elect Joe Biden’s talk of forgiving student debt has excited some who have student loans, but it’s still uncertain what that plan might look like.

Biden said Monday that student debt forgiveness “does figure into my plan.” In March, he supported a coronavirus relief proposal to cancel $10,000 in federal student loan debt per borrower.

Biden may be able to use an executive order to cancel some debt, but he may see a fight from Congress.

Extending forbearance or deferment on student loans

For those who are set to resume repaying debt in January, there are some options that could extend the suspension, according to Kelly Russell, director of the Office of Financial Aid and Scholarships at Fresno State.

“I always tell students that the federal government doesn’t want a student to default on their student loans. They want to help them,” she said.

Borrowers can apply for an income-driven repayment plan, which will set a monthly payment based on income. They can also request a deferment if they are undergoing certain hardships, such as income loss or cancer.

A forbearance is only granted for up to 12 months at a time and can be used when borrowers are undergoing financial difficulties, medical expenses, or a change in employment.

Interest may accrue on certain types of loans.

If a loan is privately owned, by a bank or other entity, borrowers may have similar options, but they will have to contact their servicer, Russell said.

Avoid student loan scams

Many people have received calls, emails, or letters from different companies offering relief from student loan debt. Russell says that while not all offers are scams, borrowers should be wary.

“They just have to be really careful about doing all the research,” she said. “A private company might say it will give you a better interest rate than your federal loans, and that could be. But a student has to make sure that it’s to their advantage to do it.”

For example, she said, if a person had consolidated all their federal student loans over to a private borrower, they would not have qualified for the pausing of payments and interest this year.

The U.S. Department of Education warns consumers that some companies will charge for lowering monthly payments, consolidating loans, postponing payments, and other services that can be done for free by contacting their loan servicer.

If an offer requires up-front or monthly fees, asks for your student aid login information, or promises immediate debt cancellation, it’s a red flag. Scammers also try to dupe borrowers by claiming the borrower must act fast because of a changing law or fast-approaching deadline.

Russell said the population of students at Fresno State who borrow money to pay for school is lower than the national average, which was 65% in 2019, according to U.S. News and World Report. About 60% of the population qualifies for Pell Grants.

Students who need resources and advice about student loans can contact the university’s Money Management Center.

The Education Lab is a local journalism initiative that highlights education issues critical to the advancement of the San Joaquin Valley. It is funded by donors. Read more from The Bee’s Education Lab on our website.

This story was originally published November 18, 2020 at 5:00 AM.