Four tips for Dealing with Student Loans During the Coronavirus Crisis

Student loan borrowers may find relief from making payments on their loans during the Coronavirus Crisis.  The most important first step is to know your lender: the federal government under the Federal Direct Loan Programs or a non-federal lender, a.k.a. Private lenders. This differentiation is critical because the relief programs offered are very different.

Here are four tips to help student loan borrowers during the Coronavirus crisis:

  1. Contact your student loan servicer immediately to understand what relief your lender offers.
  2. If possible, continue to make the payments on federal loans.  With a 0% interest rate, the entire payment will be used to reduce the principal amount of the loan. The total cost of the loan and the time it takes to repay the loan will be reduced.
  3. If possible, pay the interest due on private loans during a forbearance to keep the amount you owe the lender from growing.  The amount of interest that you do not pay each month will most likely be added to your loan balance – increasing the cost and time it will take to repay the loan in full.
  4. Keep track of when a relief program may terminate or extend and be sure you take the actions necessary to be included in the extension.


Non-federal lenders could be a credit union, bank, state agency, credit card company or a student loan finance company.  No matter who the private lender may be, there is common advice.  Determine what relief programs may be available by checking your account online, visiting the student loan servicer’s web site, or calling the student loan servicing center.

Private lenders and student loan servicers are offering advice to student loan borrowers such as that posted by LendKey: Coronavirus (COVID-19) Updates.  Updates like these will inform borrowers about special programs that may be in place to provide some payment relief.

Here are some questions to ask your private student loan servicer:

  • Is the lender offering a forbearance and/or an interest rate reduction program?  If so, what do I need to do to qualify? How long will it last?
  • During the forbearance period, what will be my interest rate?
  • During the forbearance period, does the interest continue to accrue?
  • During the forbearance period, can I pay the interest that is due and not pay the principal?
  • If this crisis goes on beyond the initial forbearance period, what do I need to do to extend the forbearance?


The Federal Department of Education recently announced a series of important measures to help relieve some stress for federal student loan borrowers. Here’s a link to U.S. Secretary of Education Betsy DeVos’s announcement.

Federal student loan borrowers will have the interest rate on their loans reset to zero (0%) for at least sixty days.  Borrowers may also request to suspend their student loan payments altogether for at least 60 days.  These new federal student loan relief programs do not apply to private loans.

What do borrowers have to do to get the 0% interest rate?

Nothing. The student loan servicer will automatically set the interest rate to 0% for at least the next 60 days.

How do borrowers have their loan payment suspended?

Borrowers should contact their student loan servicer to request an Administrative Forbearance. The Department of Education has instructed student loan servicers to grant this Administrative Forbearance from Friday, March 13, 2020 for at least 60 days.

Unlike the automatic reduction in the interest rate to 0%, borrowers must take action to suspend their payment. To request the forbearance, visit the student loan servicer’s website or call them as soon as possible.  Rest assured that a forbearance will be granted, but it will not be automatically applied.

What if a borrower is already delinquent on a federal loan payment?

Borrowers who are currently more than 31 days delinquent on a payment will automatically be granted a suspension of payments as of March 13th.

What if borrowers want to continue making payments?

Borrowers who continue making payments will also benefit from the 0% interest rate.  With no interest to pay for at least the next 60 days, the full loan payment will be used to reduce the principal.

The Last Word

In these truly extraordinary times, student loan borrowers should reach out to their student loan servicers immediately. There are options available to provide some relief to borrowers, but the borrower needs to take action now to benefit from these programs.

The best advice to student loan borrowers during this crisis period:

  • Contact your student loan servicer as soon as possible
  • If possible, make some payments on the loan
  • Stay informed about how to stay enrolled in the relief program that works best for you.