Student Loan Help During the COVID-19 Pandemic

Updated September 11, 2023

The Coronavirus Aid, Relief and Economic Security Act, or CARES, suspended payments for all federally held student loans. Interest rates on all federal student loans also were reduced to zero. This pause was extended several times.

Now, after three years of suspended interest and payments, interest started to accrue again on September 1, 2023, and payments will restart in October 2023. Borrowers will receive advanced notice on the specific date of their next payment.

But what if your student loans don't qualify? If you took out a private loan to pay for school, your loan is not included in the CARES Act. Additionally, certain types of Federal Family Education Loans, or FFEL, do not qualify, because they are held by commercial banks.

"A lot of those loans (FFEL), they're federally held, but a few of them are commercially held," said Shannon Doyle, program manager of Partnerships and Financial Education for Lutheran Social Service of Minnesota. "They originated with banks and are still held by those banks, technically. So those loans would not qualify."  Doyle says if you have a private loan or FFEL loan, the first thing you should do is call your lender. 

"There are plenty of lenders of private student loans who are offering hardship plans," she said. 

For example, Navient is allowing some borrowers to postpone payments for up to three months, but there's interest still accrues. Doyle says that's often the case. "I haven't heard of anyone yet who is changing the interest rate for private student loans," she said. 

If you're in a really tough spot and need to pick which bills you'll pay, Doyle says private student loans should come before high-interest credit cards. "With private student loans, they'll go into a default more quickly than a credit card will," she said. 

Doyle says private student loans typically default 30 to 90 days after a missed payment. Credit cards, she says, usually give 120 to 180 days before asking for payment in full or sending it to a collection agency. 

Lutheran Social Service of Minnesota offers free and confidential counseling for anyone who needs help managing their student loans. Anyone interested should call 888.577.2227.