Should You Really Stop Paying Your Student Loans Due To Coronavirus?

Congratulations, you can pause your federal student loan payments for six months. Now, keep paying them anyway.

Here’s what you need to know.

Student Loans

Congress just gave you six months of financial relief in the form of the CARES Act, the new $2 trillion stimulus package, that brings major changes for your federal student loans, including, among other benefits:

1. No federal student loan payments

2. No interest on your federal student loan payments

3. No garnishment of wages, Social Security and tax refunds

Now, the big question is this: Should you stop paying your federal student loans?

Who Should Keep Paying Their Federal Student Loans

To some, this question has an obvious answer: “of course you stop paying your federal student loans.” After all, why would you pay your student loans when you don’t have to? It’s true. You don’t have to make any federal student loan payments through September 30, 2020 because your federal student loan payments have been suspended. If you lost your job, got furloughed or are facing financial hardship due to Coronavirus (as millions of people are), then by all means you can stop paying your federal student loans. Take these six months to focus on other priorities. Many borrowers who are still working have asked how to receive paid sick leave due to Coronavirus. It’s important to know if you qualify for paid sick leave, which may provide additional financial resources during this time. It’s also important to know if you qualify for a stimulus check.

Who Should Not Stop Paying Their Federal Student Loans

If you have the financial resources, keep paying your federal student loans. Why? Think of it this way: after the suspension period ends on September 30, 2020, your student loan balance will be the same. Your interest won’t be 0%; it will be the same as before. Remember, the federal government is not paying your federal student loans during this period. When this “grace” period ends, you will still have to pay your same student loan balance before payments were suspended. So, think of this period as an optional pause, not a mandatory one.

You can continue to pay the same monthly amount. Or, as long as you’re in forbearance, you won’t be penalized for making a payment that is less than your usual monthly payment. You can make a payment of any amount. Your payment will first be used to pay off any accrued interest prior to March 13, 2020 and then will pay your principal balance. If you want to check in with your student loan servicer, here’s a helpful guide to contact your federal student loan servicer. Again, if you have financial resources, these six months are an opportune time – with no interest – to chip away at your student loan balance and pay off student loans faster.

Helpful Resources: What To Do With Your Student Loans

More Options For Your Student Loans

What else can you do to pay off your student loans more quickly and save money during this challenging period? Here are four options, all of which have no fees: