Should you really stop paying your student loans because of the coronavirus?

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The new $ 2 trillion coronavirus economic stimulus bill allows you to suspend your federal student loan payments for 6 months. Is that really a good idea?

Here’s what you need to know.

Student Loans

President Donald Trump has signed the CARES Act, which will provide several benefits to student loan borrowers through September 30, 2020, including:

Given these very new benefits, many questions arise, including how important the coronavirus is to your student loans and whether the new business stimulus law allows for student loans. If you would like to contact your student loan service provider, you will find helpful instructions here on how to contact your federal student loan service provider. However, many student loan provider websites and the US Department of Education website may not have been updated to reflect this new student loan information and benefits. For example, if you seek public service loans and choose to pause payments during this period, your non-payment will be “counted towards” the 120 monthly payments required. So if you see conflicting information, rest assured that the incorrect information on these websites should be corrected soon.

Should You Pay Your Federal Student Loans?

The question of how to pay student loans during the coronavirus crisis worries everyone. Borrowers are looking for ways to lower their student loan payments. One option is to stop paying federal student loans by September 30, 2020, which is allowed under the CARES Act. Why Should You Stop Paying Your State Student Loans? The main reason is to save money in the public health area during this public health emergency. For example, if you’ve lost your job or got into financial trouble, not paying federal student loans for six months can bring financial relief. Many borrowers who are still working have asked how they get paid sick leave due to the coronavirus. It’s important to know if you’re eligible for paid sick leave, which can provide additional funding during this time.

However, if you cannot or proactively decide not to pay your federal student loan during this time, there are a few things you should know. First, you will not be charged any interest since your interest rate is 0%. This means that there will be no new interest on your federal student loan balance. Second, you will not receive any late payment fees or penalties for non-payment. Third, it’s important to know that the federal government won’t pay your student loans during this time. When this “grace period” ends, you will still have to pay the same balance on the student loan before payments are suspended. So think of this period as an optional break, not a mandatory one.

What If You Still Want To Pay For Your Student Loans?

If you have the financial means and want to pay off the student loan early, you do not have to stop paying your federal student loan. Why should you ever pay off your federal student loan when you don’t have to? Since the interest rate is 0%, this is a potential way to pay off student loans faster. If you choose to keep paying your federal student loans, Your monthly payment doesn’t change. Your full payment will only be counted towards your principal balance (once all student loan interest is paid before March 13, 2020). If you have funds, these six months are a good time – with no interest – to use up your student loan balance. It’s a long-term investment that can pay off more than you might think.

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