Financial Assistance Options for Private Student Loans During COVID-19
Covid-19 has disrupted the way the world used to work. So many people are now stuck at home with no job and an uncertain income. People are struggling just to survive during these troubling times. And to add on top of that, student loan payments are still looming over their heads.
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Loan Lenders
The process of borrowing loans to pay for student loans can be as problematic as it is confusing. However, the top private loan lenders can help potential borrowers through their emergency programs.
Every individual is entitled to get relief and student loan forbearance (a temporary suspension of student loan payments due to an emergency) during tough times. Still, even these are based on the lender that the individual is getting the loan from. This relief and forbearance can be accessed due to the Covid-19 pandemic, which is an emergency and they can help at least pause the payments for one month.
However, it should be noted that during the forbearance period, the loan interest will accrue and will need to be paid after. This will result in a higher student loan cost than before the relief period. Therefore, choose the right financial assistance and in this case, the right lender to help you get through this pandemic.
Major Private Lenders
When the pandemic surfaced, major private banks set out to provide relief funds to students during these tough times. You can make the best possible use of these. Here are a few providers of private student loan relief:
Citizens Bank – They offer an emergency forbearance of 3 months due to Covid. You also get the option to extend this for an additional 3 months if you continue to face financial difficulties.
College Ave – Here, you may be subject to a disaster or hardship forbearance that happens in 3 to 6-month increments.
Ascent – Due to the pandemic, users can choose a forbearance option for 3 months. If you are facing further financial problems, they will offer you another 4 months as a temporary measure.
Earnest – They offer a short time forbearance due to the pandemic with relief up to a month if you cannot make the payments on time.
CommonBond – Here, they have a disaster forbearance option in place that is there to provide relief for users during Covid-19. According to them, there is no limit to the number of months you can get relief. The best part about this is that their interest for each month will not be counted towards your full loan total.
Laurel Road – For users of Laurel Road, they have offered a 3 month period of forbearance on student loans. This is done if the user has faced a salary cut or reduced income because of the pandemic. It also comes with a 3-month extension if necessary.
How will your credit score be negatively impacted?
Having a good credit score is crucial for a lot of financial decisions down the line. If you feel you’re unable to pay the loan, you need not worry about your credit scores. Utilise these funds and keep your credit scores untouched.
Since you are looking into making pauses to your student loan payments, you may believe that these pauses will affect your credit score. We all know that not making a payment can be detrimental to your credit score, as making payments at the correct time will ensure that you build a good credit score.
However, you can rest assured that by using one of these forbearance methods, you will not bring harm to your credit score. There will be no changes made to your file, and it will remain so until you make the payment after the forbearance period.
You can even make use of forbearance when you know that you won’t be able to make the payment on time. Usually, a late payment would mean that a report will be filed against you which will result in your credit score being harmed. Therefore, by filing for forbearance beforehand, you can stop this from happening and get that payment made on time.
Refinancing your loans
When you’re facing financial hardship, the usual advice is to approach your current bank lender and try to sort out an agreement with them. They have the tools required to give you help and instant assistance.
However, if you are in a good place right now and can keep making your payments on time, you may want to look at other options that will be able to make your payment schedule easier for you by refinancing your loan. As of recent months, the student loan rates are amongst the lowest they have been before, and you can use this to save on interest and get your monthly payment value to drop.
When you switch your lender, they may offer you a more extended period to pay back the loan, resulting in lower monthly payments to be made. Granted, this would mean that your overall loan cost will increase.
Also, please keep in mind that refinancing loans might not be for everyone. There are certain limitations, such as making it harder to apply for another loan if you have recently gone through some financial difficulties or that you will need a good credit score to be given better loan rates than your current lender.
In Conclusion
There are plenty of options available in the market and choosing the right financial assistance for you is essential. Emergency funds are a great way to support students, but making use of it in the right way is important.
Things might look different once the pandemic ends. And with the plenty of financial assistance programs available, you’ll have a little less to worry till then.
