Department of Education (ED) has suspended garnishment on federally held student loans through September 30, 2021, in response to the Coronavirus pandemic. Interest on these loans is additionally suspended during this point .
ED announced that thanks to the COVID-19 national emergency, the Department will halt collection actions and wage garnishments. ED will send human resources departments letters instructing them to prevent wage garnishment. If ED receives funds from a garnishment between March 13, 2020 and September 30, 2021, they’re going to refund the wages to the individual.
This only includes loans owned by the U.S. Department of Education (ED), including Direct Loans, also as Federal Perkins Loans and Federal Family Education Loan (FFEL) Program loans held by ED. Loans owned by commercial lenders or held by the institution a student attended aren’t eligible for this benefit at this point .
On March 13, 2020, the president announced that interest would be waived on federally held student loans for a period of 60 days. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides further flexibility by allowing most holders of student loan garnishment to suspend monthly payments through September 30, 2021, with none interest accruing.
It is not advisable for employers to automatically stop payments all of sudden from the worker or the lender. Districts might not know who the loan holder is and whether they’re included within the ED garnishment suspension. While garnishments are going to be stopped during this era , employees making loan payments on their own might want to continue payments because one hundred pc of the payment is applied to the principal while the interest is waived.
Student Loan Consolidation
Unfortunately, a student loan is not a one-time process. Let’s assume that you are a bachelor and you study for four years. It is highly probable that you will need four private loans, each for one year of college payment. Besides, if your financial situation is weak, you may make additional loans to finance your other expenses. Hence, you will end up among complicated, overwhelming student loan nightmare. However, there is a solution to this problem, called Student Loan Consolidation, which will offer you some advantages.
The process of consolidating has a basic logic. In simple words, you just take a new loan. Do not be confused; you might wonder why you should take a new loan while you have many? This new loan will consolidate your other loans with a new interest rate and other terms. Therefore, instead of paying to multiple loans with different characteristics, you just pay one loan. For being eligible to Student Loan Consolidation, you need to have a good credit score and payment history.
Besides, you should finish college and start repaying or be in the grace period. There exist two types of consolidation; federal and private. Keep in mind that you cannot consolidate the federal loan with the private one. Moreover, for federal consolidation, there does not exist any minimum debt limit. However, most private lenders will put a minimum level for your debt amount to be able to consolidate.
While you try to tackle the debt problem with Student Loan Consolidation, it will be helpful if you understand its benefits and drawbacks beforehand. If managed correctly, consolidation can aid your repayment plan and finally, get you out of debt crisis. Before you decide to consolidate, it is better to get familiar with its features.
The most significant advantage of consolidation is simplicity. Paying one time or two times in a month is much easier than multiple times. Sometimes, when we get overwhelmed, we can forget about the payment dates. Monitoring and keeping track of student loan records might be challenging. However, if you consolidate, you have to follow one new loan, and you ensure on-time payments. With the help of more organized loan processes, you will not also have to deal with penalties for late payments.