Stuck with federal student loan debt amid COVID-19 pandemic? Here's what you should know
Should you refinance your federal student loan? Is there a grace period for loan payments because of the coronavirus pandemic? An expert weighs in.
Graduating college seniors are facing an uncertain job market due to the coronavirus pandemic and many are saddled with student loans.
Many might be wondering if it's a good time to ask for an extension on the loan payments and whether refinancing is a better option. Mike Brown with LendEDU joined Eyewitness News via Skype to share some advice for new grads.
What do graduating college seniors need to know about repaying their student loans after graduation? Is there a coronavirus grace period?
"Underneath the CARES Act, federal student loans actually do not have to be paid until Sept. 30, they're calling it "pandemic forbearance." So for all student federal loans, no payments are required... and also during this time, there will be no interest accruing until Sept. 30."
If you're still able to make payments, if you're lucky enough to be in that situation, it is also a great time to make payments because there is no interest accumulating so you can really chip away at that student loan debt."
Is now a good time to refinance federal student loans?
"We actually found the average student... owes about $30,000 in student loan debt. Right now, because of the pandemic forbearance and (the fact that) there is no interest, it's not a great time to refinance your student loans."
"The main reason why you want refinanced federal student loans is to receive a lower interest rate in the private market but because there is no interest right now, it just doesn't make much financial sense to refinance."
So should students wait until September to refinance?
"I would wait until the pandemic forbearance is lifted...the interest rates might jump again for federal student loans, but again, if we're still in this situation come September 30, Congress might extend the pandemic forbearance for another six months so we don't know. But if they don't, and interest rates jump on your federal student loan debt, then you might want to look at refinancing."
For more information, visit www.lendedu.com.
