There’s been a lot of news lately about how the government is stepping in to help people handle the financial fallout of the COVID-19 pandemic. Checks to most Americans for $1200 certainly top the list of what we all hope to receive. But did you know that there are also new rules about student loans that could save you money?
New Government Regulations About Student Loans
As part of the 2 trillion-dollar coronavirus stimulus bill that Congress passed at the end of March 2020, you can temporarily stop paying your federal student loans. No payments will be due until September 30, 2020 and your interest rate is set to 0%. You do not have to take any action and you will be notified of the change. It’s important to understand, though, that this applies only to federal student loans, not private student loans. If you borrowed money from a private lender, you must still pay. And if your federal student loan is owned by a commercial lender or your school, as some under the Federal Family Education Loan (FFEL) Program and Perkins Loans are, you may also need to continue payments. Check with the loan originator as they can suspend interest and payments on a voluntary basis.
3 Ways to Save Money on Your Career Training Student Loans
No interest and suspended payments, by themselves, will not save you money. But there are 3 ways you can save money as a student borrower during the six months you’re not required to pay:
- If you’re financially able to, continue to make payments during the suspension. Your payment amount will be the same but all the money you pay will go directly to principle—which will save you money in the long run. Depending on the amount you owe and your interest rate, your six months’ worth of payments could add up to significant savings for your cost of attendance. So, consider the same repayment terms even with the federal changes.
- Does your employer offer student loan payments as a benefit? If you’re one of the lucky employees that receives that financial aid perk, it’s always been considered a part of your income. During this special six-month forbearance period, it won’t be. And if your employer doesn’t offer the benefit, now might be the time for them to start. Employers can pay you up to $5250 in tax-free educational assistance.
- If your long-term plan has been to take advantage of a public service loan forgiveness program, you can still count the special six months forbearance toward your obligation. For example if you work full-time as a Medical Assistant and plan to do so for ten years, now you’ll only be required to do so for nine years and six months to get the benefit of loan forgiveness.
Watch Out for these Student Loan Scams
With so much news about the COVID-19 pandemic and government benefits coming at you every day, it’s easy to get confused. Sadly, that’s exactly what scam artists are hoping for. Don’t get fooled! Here are 3 scams to be aware of:
- Fake Checks: Pay close attention to any check that isn’t issued from the U.S. Treasury, especially if it’s for an amount that doesn’t make sense. If a check you didn’t expect comes from someone you don’t know, do not cash it; it’s a way for criminals to access your bank account.
- Upfront Fees: If anyone claiming to be from a governmental agency asks for an upfront fee, don’t pay it. There are no required upfront fees for the stimulus checks or any payments for student loans.
- Share Your PIN Request: The U.S. Department of Education will never ask you to share you Federal Student Aid PIN.
At Porter and Chester Institute, we offer career-focused programs that provide you with classroom knowledge and hands-on skills that will help you become a valued employee. We also teach you about important professional and career skills, including how to be responsible about your finances and your student loans. And we’re still teaching. Want to learn how we’ve adapted to the COVID-19 pandemic? Request more information today.