Student loans and coronavirus: Top 5 questions

How will coronavirus affect your educational debt? Read on to find out what you need to know about student loans and coronavirus.

For millions of Americans, COVID-19 is having a profound financial impact. The novel coronavirus has led to record unemployment, as well as reduced hours for many employees lucky enough to still be working.

Unfortunately, young adults may especially be feeling negative financial effects, as many were already struggling with high student loan debt bills before the pandemic wreaked economic havoc. More than half of all young adults who attended college have some educational debt, according to the Federal Reserve, and around 20 percent of those with educational debt were behind on payments.

That's partially the reason for the Federal Reserve's recent emergency rate cuts, which set interest rates on student loans to a historic low. Though this rate cut doesn't affect federal student loans, those with private loans could benefit — particularly, by refinancing to improve your current interest rate and save some cash for your savings accounts. Credible can help these student loan borrowers compare multiple private lenders at once to snag the best rates available and lower monthly payments.


Whether you're burdened by federal and private student loans, it's important to understand a few key things about student loans amid the coronavirus crisis. The answers to these five common questions can help.

1. Should I refinance my student loans right now?

Student loan refinancing can often reduce your interest rate on loans, lowering your monthly payment and total repayment cost. But whether you should refinance will depend on your personal situation. While interest rates are low right now, a new refinance loan may offer you a reduced rate — but you'll need to qualify based on your income and credit score.

Credible can help you find the student loan refinancing rates you qualify for within just three minutes — just input some of your information into their free online tool.


If you're refinancing federal student loans, you also need to be aware you'd be giving up the chance at loan forgivenessincome-based payment options, and other benefits of federal student loans.

Loan calculators can also be useful tools to determine whether you should refinance your student loans. You can use Credible's student loan refinancing calculator to determine how much you can save by refinancing. You can calculate the potential reduction in payments and total interest costs that you'll benefit from if you lower your student loan interest rate by refinancing.

2. Do I have to keep paying my student loans during the pandemic?

The Coronavirus Aid, Relief, and Economic Security (CARES) Act enables you to pause payments on federal student loans. In fact, payments on federal student debt are suspended from March 13, 2020, to September 30, 2020.

You do not have to do anything to qualify for this administrative forbearance — as it is automatic. And no interest on your loans will accrue during the time period when payment obligations are suspended.

This stimulus package relief applies only to federal student loans, though. If you have private student loans, you're still obligated to pay them. If you're looking to save money, you may want to research refinancing options.


If you're having trouble keeping up with payments on your private student loans, reach out to your loan servicer. Most lenders will allow you to put payments into forbearance if you're struggling, but interest will continue accruing. If you can afford to, making payments that at least cover interest can help you avoid growing your loan balance, which could be a costly mistake.

3. Can I still pay my student loans if I want to?

While you're not obligated to continue making payments on federal student loans right now, you can continue doing so if you choose. If you have income coming in and you don't need the money to shore up your emergency fund or fulfill other pressing financial goals, paying on your student debt now could make it easier and cheaper to become debt-free as soon as possible.

With coronavirus student loan interest payments suspended, any payment you make now would go entirely towards reducing the principal balance on your loan. But while this means paying down your balance faster and lowering total repayment costs, you might not want to pay your loans if you might need money to help you weather a recession — so be sure you have an emergency fund and your immediate bills are covered before taking this approach.PREPARING FOR POSSIBLE CORONAVIRUS RECESSION — 5 WAYS TO REDUCE YOUR DEBT

4. How do I handle student loans after losing my job?

If your job is affected by the coronavirus, the administrative forbearance period on federal student loans means you won't have to worry about making minimum payments until the end of September. If you can still cover the payments on your private loans with unemployment, aim to do that so your balance doesn't grow bigger.


If you haven't found new employment by the time the coronavirus student loan payments waiver expires, you have multiple options for federal student loans including economic hardship deferment, unemployment deferment, forbearance, or choosing an income-driven plan that caps payments at a percentage of income. If you can qualify for deferment, interest will be covered on subsidized student loans so your balance won't continue rising on them during the time you aren't making payments.

5. Does the CARES Act include any student loan forgiveness?

The CARES Act pauses payments but student loan forgiveness is not among the coronavirus student loan relief options the legislation provides. Forgiveness options are available for borrowers doing qualified public service work or who are on an income-driven payment plan and who make payments for a long enough period. When loans are forgiven, borrowers do not have to pay the remaining balance due.