The COVID-19 pandemic has caused unforeseen disruption across virtually every industry. From record unemployment to thousands battling illness, many Americans are facing financial struggle of devastating proportion and, for many, there is no end in sight. Thankfully, millions of Americans were given respite by way of the CARES Act, which was signed into law earlier this year. With the signing of the CARES Act, the government aimed to provide financial assistance for those struggling in the wake of massive job loss and economic strain. One condition of the CARES Act called for the halt of federal student loan payments.
While the federal student loan relief clause of the CARES Act has offered relief for millions of borrowers during a time of widespread financial stress, it simply wasn’t designed to serve as a long-term solution to the economic crisis caused by COVID-19.
With the benefits afforded by the CARES Act set to expire on January 31, 2021, many borrowers are left to grapple with uncertainty. How will they continue to make payments while dealing with job loss? What consequences will they face if they are unable to make payments at all?
If you are currently struggling with federal student loans and determining how to pay off your student loans once benefits expire, know that you’re not alone. You, like millions of Americans during these trying times, have been thrust into this dire financial situation. While there isn’t much you can do to control the coronavirus pandemic, it is up to you to begin exploring your options when it comes to your own financial relief. One of these options is to learn how to lower student loan interest rate.
“How can I lower my student loan interest rate?” is a common question borrowers face during times of poor financial outlook. You can, however, take comfort in the fact that there is help available. Here are some things you should know about the CARES Act and its impact on federal student loan relief.
When does the CARES Act end?
The CARES Act is set to expire on January 31, 2021. At this time, regular federal student loan payments can resume, which may leave millions of borrowers in a scary financial situation. But there are other options for relief that go beyond the CARES act. You don’t have to be stuck with federal loan payments if you simply can’t afford them at this time. Whether you lost your job or are currently on furlough, there are actions you can take to regain some of the relief provided by the CARES Act.
How can I continue to get relief on federal student loans?
While the student loan benefits afforded by the CARES Act will soon come to an end, borrowers have choices when it comes to further relief. One option is to request further forbearance or deferment of your federal student loans. If you plan on taking this route, it’s recommended that you don’t wait.
Another option to get relief on federal student loans is to apply for an income-driven repayment plan. Under an income-driven repayment plan, you’ll get some relief because payments will be based on income. This means if you are not working or have suffered a pay-cut due to COVID-19, you may be able to secure a lower monthly payment for your loans for the meantime. This can result in hundreds of dollars of savings each month.
Another common method borrowers take to relieve some of their financial stress is to refinance their student loans. This is one way to not only gain some relief from high payments, but also to save money in the long run.
How refinancing federal student loans can help your finances
There are a number of benefits to refinancing student loans. In fact, now may be one of the best times to do so, for several reasons.
Currently, refinance interest rates are at historic lows, which means now may be the ideal time to secure a lower rate than your loans currently carry.
By refinancing your student loans and securing a lower interest rate, you may save money not just month to month, but over the life of your loan as well. You can also choose to refinance to a longer repayment term, which will lower your monthly payments and relieve some of your financial stress for the months to come.
Unfortunately, qualifying for student loan refinancing isn’t always easy. Many factors come into play as lenders determine whether you are a good candidate for refinancing. And while not everyone will quality for student loan refinancing – you’ll need a good credit score, after all – you can begin exploring how to improve your credit score to improve your chances of approval for refinancing in the future.
Finding your best student loan refinance deal
If you’re hoping to find a solution to your federal student loan payments before the CARES Act relief expires, the time to act is now. You don’t have to wait until January 31 to begin exploring your options and planning for the near future.
Start by comparing refinance rates and learning how to lower student loan rate today. With our Compare Rates tool, you can compare interest rates and terms through different lenders, giving you a birds-eye view of your refinancing prospects.