Private student loans have so far been left out of federal relief efforts, including the suspension of all federal student loan payments through September initiated under the CARES Act. After mounting pressure from states, private student loan servicers are stepping up and offering their own forms of financial assistance to borrowers who are unable to make their payments during the crisis.
Though most private lenders are still collecting interest during the forbearance period, these changes are likely still a relief for borrowers in need.
Here’s how some major private student loan providers are offering repayment assistance during the COVID-19 crisis.
1. Sallie Mae
According to its coronavirus resource page, Sallie Mae has created “additional options for customers experiencing financial difficulty” during this time.
According to a Sallie Mae representative, that relief can include a three-month suspension of student loan payments, known as COVID-19 forbearance. Interest will accrue but not capitalize during the forbearance period. There is no proof of hardship required to qualify for the forbearance period, and borrowers can contact Sallie Mae directly via chat or mobile app to request the forbearance. Calling is also an option, though wait times may be long.
Customers who require more long-term assistance will be able to apply for loan modification programs, like its interest rate reduction program, says a Sallie Mae representative. These programs help borrowers avoid default and keep their accounts on track until they return to more solid financial footing.
Though Navient is mostly known for being a federal student loan servicer, it also services private student loans. Navient is currently offering a few options for its private student loan borrowers, including a new coronavirus national emergency forbearance. Borrowers can also take advantage of its previously available rate reduction, interest-only repayment and extended repayment programs.
Navient’s forbearance program will postpone private student loan payments for up to three months. Interest will accrue during this time but will not capitalize at the end of the period.
The rate reduction program will reduce the loan’s interest rate and lower the monthly payment amount for a six-month period. Borrowers typically must apply for this assistance, which can require providing proof of income and making three qualifying payments beforehand.
The interest-only program lowers payments so that they cover just the interest that accrues, and it can last from one to four years. This will increase the amount you pay over time.
To apply for assistance, Navient’s website says borrowers and co-signers may have to submit information about their finances for review by the servicer.
Like Navient, Nelnet is known for being a federal student loan servicer, but it also manages private student loans. The servicer is currently offering private student loan borrowers a 90-day coronavirus forbearance. You can see if your Nelnet loans are federal or private by looking at your account number; if it starts with a D or a J, your loan is private.
As mentioned, under the coronavirus forbearance Nelnet will temporarily suspend payments for 90 days. It’s unclear how interest will be handled during this period, but it’s possible that Nelnet will follow other private lenders and will not capitalize interest at the end of the forbearance term.
4. Discover Student Loans
Discover is offering one of the most generous forms of private student loan relief during the COVID-19 crisis. Borrowers can request Discover’s Skip-A-Pay option and defer their private loan payments for up to two months, without interest. The forbearance period can be extended if hardship lasts more than two months. Discover says no proof of hardship will be required for customers applying for forbearance.
To request the Skip-A-Pay option, Discover borrowers should contact the company.
SoFi is letting borrowers who can’t afford their payments apply for a 60-day forbearance, with an optional 30-day extension to those who are still impacted after that time. Interest will still accrue on loans in forbearance, and opting for forbearance will extend the loan’s repayment term.
According to CommonBond, the coronavirus’ classification as a natural disaster means its borrowers affected by the crisis can apply for its natural disaster forbearance program. The natural disaster forbearance offered by CommonBond will last through the end of the national emergency declaration. During the forbearance period, payments will be paused but interest will still accrue.
CommonBond will waive late fees during the national emergency period, and the number of months you postpone payments won’t count toward your standard forbearance limit.
Earnest is offering up to three months of payment postponement through its disaster forbearance program. During these three months, interest will accrue, but it won’t be capitalized at the end of the forbearance period.
Earnest’s disaster forbearance program isn’t guaranteed to all of its borrowers. According to the lender’s COVID-19 response webpage, “qualified clients” will be offered the forbearance period after filling out a request form. The company asks interested customers to include details about how they’ve been financially impacted, the industry they currently work in and when they would be able to resume loan payments.
8. College Ave Student Loans
College Ave Student Loans is offering a disaster forbearance program that will temporarily suspend payments on private loans for three consecutive months. During the forbearance period, interest will continue to accrue, but it won’t be capitalized at the end.
To apply, College Ave customers must email the company a forbearance request including their loan ID, full name and date of birth. It doesn’t appear that a proof of hardship is required to apply for the forbearance program. College Ave says requests will typically be processed within five business days.
9. Citizens Bank
Citizens Bank is offering a three-month forbearance period to all private loan borrowers. During the forbearance, interest will still accrue but will not be capitalized when the period concludes.
Additionally, Citizens Bank says it will allow customers who are still experiencing financial difficulty at the end of their original three-month forbearance period to request an additional three months of relief. However, the loan will reamortize at the end of the additional three-month period, which means the skipped months will extend your repayment period and change your monthly payment amount.
Citizens Bank customers interested in the three-month forbearance period should contact Firstmark Services, a private student loan servicer, at 1-866-259-3767.
Should You Request Student Loan Forbearance?
Student loan forbearance temporarily stops payments on student loans and can be a good option for individuals who don’t have cash on hand to make their payments. But it isn’t an option that should be taken without serious consideration.
Most private student loan forbearance options mean interest still accrues during the period you’re not making payments. While this temporary relief might be necessary, know that it can increase the total amount you pay back. Consider paying enough to cover interest as it accrues, if you’re able to, during forbearance.
These are difficult times for many, and figuring out what to do with your student loans during this crisis isn’t easy. Contact your student loan servicer and discuss your options as soon as you know you need assistance.