Private Student Loans During COVID: Here’s How to Save Money

Sara Cantu

We are living in tough financial times. Even before the COVID-19 pandemic hit and wreaked havoc on normal life for billions, many millennials were living paycheck to paycheck.

This is a harsh reality for a large percentage of adults, regardless of age. And it seems as if the financial stress has only worsened. This has caused many consumers to pause and reevaluate their spending. Between mortgages, car payments, credit cards, and utilities, Americans are facing high costs of living that can seem impossible to maintain on low wages. Add student debt to the mix and the situation looks particularly bleak.

You may be one of the millions facing sky-high student loan debt, making times like these even more stressful. Unfortunately, it’s not uncommon. But the federal government has taken steps to help Americans during this time of need with the passing of the CARES act. Federal student loans supported by the government are still currently suspended, giving a portion of borrowers a small reprieve as the nation seeks to control the spread of COVID-19. This student loan freeze is set to continue through September 30, 2021.

But despite this student loan pause, there are still many consumers for which there is no relief in sight – and that includes borrowers with private student loans.

If you haven’t received any assistance from the government when it comes to your private student loans, it’s time to act.

There are steps you can take to simplify your financial life amid COVID-19. This will help make your monthly bills more manageable, getting you closer to getting your financial life back on track.

One of the easiest ways to take control of your student debt is to refinance your loans. Refinancing your student loans is a great way to kick-start your new financial plan and start working toward a student debt-free life more quickly.

Before you consider refinancing your student loans, it will help to understand the benefits and how they can affect you going forward.

Student loan debt relief during COVID-19

There’s no denying the devastating impact COVID-19 has had on the economy.

Because of this, federal student loans borrowed from the government are currently subject to postponement until September 30, 2021.

While this student loan freeze is great news for borrowers who have loans with the U.S. Department of Education, it does little to confront the struggles private student loan borrowers are currently facing. And these struggles seem to be growing by the day.

These are scary times, indeed. Many borrowers are facing unforeseen expenses caused by job loss or illness, and have received no assistance at all. If you are one of the millions still struggling with student loan payments during the coronavirus pandemic, now is as good a time as any to explore your options. Learning how to lower student loan payment may be your first step.

How to lower student loan interest

Borrowers choose to refinance their student loans for different reasons.

Refinancing your student loans can carry several benefits, especially if your loans don’t qualify for the current student loan freeze. One of the biggest benefits you’ll see from refinancing private student loans may be a much lower interest rate. If you have a great credit score, secure employment, and a good payment history, lenders may offer you significantly lower rates than you were offered when you first took out your loans.

Learning how to lower student loan interest can help you save up to thousands of dollars over the course of your loan. Incredibly, some borrowers may even see five-digit savings by simply refinancing their student loans. If you aren’t currently seeing help from the federal student loan pause, lowering your interest rate may be the next best thing.

One other benefit of refinancing your private student loans is the ability to renegotiate your loan terms. This can help you lower your monthly payment by extending the period over which your loan is paid off. For example, if you are currently committed to a 15-year loan, you can negotiate a 30-year loan that may see your monthly payment cut by nearly half. Savings like these are an incredible source of help for struggling families during times like these. Refinancing your loans may be just what you need to regain control of your financial situation.

Other ways to manage private student loans

While refinancing student loans is a great option for simplifying your financial life, not everyone will qualify. Whether you have a low credit score or lack steady employment, lenders may deny your request for refinancing based on a number of criteria. But that’s okay. Luckily, there are other things you can do to make the brunt of student loan repayment easier to bear.

Consider requesting forbearance and deferment to take the pressure off for the meantime. You can do this by contacting your lender and asking what type of assistance is available during the coronavirus pandemic. Be candid and explain how your student loan payments are causing additional financial strain. While you may not benefit from the government’s student loan pause, there is still assistance available for student loan borrowers amid COVID-19, and you may qualify. Learning how to lower student loan payment is one of the best things you can do to ease your financial stress during times like these.

Refinancing your student loans

If you’re hoping to take a big step toward improving your financial future, student loan refinancing may be one of the easiest options.

Doing research is key to finding the best possible offer available to you. You may be faced with several great offers from several different lenders.

Our Compare Rates tool can help you locate the right lender for you by comparing interest rates and terms in one plan – all at once.

While you may not currently benefit from the government’s student loan interest pause, there is still hope. Refinancing your student loans can provide some of the relief you are looking for to improve your financial life in the time of COVID-19.

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