Nursing students throughout the country are being greatly affected by COVID-19, especially regarding school, student loans, and the future of loan repayment.
On March 27, 2020, President Donald Trump signed the CARES Act into law, which among other things, gave relief to student loans. While temporary, the impact that it is having on nurses saddled with student loans is immense.
Some important changes that affect nursing student loans include:
- Payments will automatically be stopped from March 13, 2020, through Sept. 30, 2020.
- Interest on ALL federal student loans is currently 0%.
FAQ: Nursing Student Loans
1. What loans are changing to 0% interest rates?
- Defaulted and non-defaulted Direct Loans
- Defaulted and non-defaulted FFEL Program loans
- Federal Perkins Loans
2. Can I make payments on my federal loans while they are suspended?
Students have the ability to continue making payments on their federal student loans but it is optional. During this period, you won’t be penalized for making a payment that is less than your usual monthly payment.
3. Do I have to keep making payments on my private loans?
Yes! Unfortunately, the suspension of payments only affects federal loans. If you are having difficulty making payments it is best to contact your service loan provider to discuss options.
4. How do I refinance my private loans?
Interest rates are VERY low right now and refinancing is a smart move. When you refinance student loans, you will get a new student loan with the new lower interest rate which will allow you to pay off student loans faster. Refinancing student loans have no fees associated and you can refinance as many times as you like.
- Contact the loan servicer and explain that you would like to refinance your student loan
- Ask for flexible repayment options including switching to interest-only repayment plans, pausing payments, and additional interest refinancing
5. When does the 0% interest rate stop?
Based on the implementation of the CARES Act, the 0% interest period is set to expire on September 30, 2020. All individuals with federal student loans will be contacted no later than August regarding the process to restart making payments again.
6. Will all student loan debt be canceled?
Currently, there are numerous Congress members that have proposed the cancellation of partial or all student debt. The Student Debt Emergency Relief Act proposes the following:
- Cancelling at least $30,000 in debt per borrower
- Provide immediate monthly payment relief for all borrowers
- Shield borrows from involuntary collections during COVID-19 health crisis
Unfortunately, no one knows if this will actually happen or when, if ever. Financial advisors are recommending to not assume this will happen and continue to consider what will happen after loans are no longer deferred.
7. My income has changed due to COVID-19 and I won’t be able to afford my monthly payments?
First, contact your loan provider and explain the situation and discuss possible options. For example, an income-driven repayment plan might be a good option. This calculates your monthly payment based on your gross income. If you are already enrolled in an income-driven repayment plan – this is an ideal time to recalculate your income and payments.
8. What is the best option if I have student loans?
Refinancing is a great option right now. While the federal interest rate is 0% that is set to go back up at the end of September 2020. Most federal interest rates prior to COVID-19 were roughly 5% to 7%. Some financial advisors are speculating the loans will go right back to their previous interest rates in the fall.
This is a problem for nursing students everywhere. Because of the uncertainty, some are recommending refinancing loans immediately while interest rates are between 3% and 4%. This allows students to pay their loans quicker, pay less money, and get out of debt quicker.
Refinancing federal student loans requires students to take out a private loan to pay off the federal loan. The payments would then go to the private loan company. This is an option for some, but be wary.
If you pay off a federal loan with a private loan, you’ll be ineligible for government programs like income-driven repayment and student loan relief due to the coronavirus pandemic. Don’t refinance federal student loans unless you’re sure your job isn’t at risk and you won’t need these options.
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