Here's what to do about your student loans during the COVID-19 crisis:
2. If You’re Working Toward Public Service Loan Forgiveness
For these borrowers, it doesn’t make much sense to keep paying loans, even if you can. If and when you do qualify for PSLF, you’ll receive forgiveness on the outstanding balance without needing to pay income tax on the amount forgiven.You don’t have to make payments right now, but since new interest won’t accrue, any payments you do make will be turbocharged. That’s because more of your payment will go toward your principal balance, helping you pay off the loan faster.
The government will not withhold your pay, your tax refund or your Social Security payment — known as Treasury offsets — for at least 60 days if you’re in default, starting from March 13. Additionally, the Department of Education said on Wednesday that it will refund $1.8 billion in offsets to more than 830,000 borrowers whose offsets were in the process of being withheld on March 13, when President Trump declared a national emergency due to COVID-19.
If you’re worried you’ll need help after the government’s pause on payments has ended, you can sign up for anto limit your monthly bill to a percentage of your income for as long as you need to. You’ll also get forgiveness after 20 or 25 years of payments, and you’ll pay income tax on the forgiven balance. If you took out federal direct PLUS loans to help your child pay for college, these are included as part of the stimulus package’s relief offerings.
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