Avoid increasing student loan debt during coronavirus with these 5 tips

Don't let coronavirus increase your student loan debt. Follow these five tips to limit the economic fallout.

Coronavirus has had a devastating impact on the economy in the United States. The economic fallout is affecting everyone, including current and former students with educational debt they have to pay.

Student loans are already a major burden for most people, so taking steps to ensure the pandemic doesn't increase what you owe could be very important to your long-term financial security. Here are five tips you may want to consider.

1. Understand the federal help available to you

The Coronavirus Aid, Relief, and Economic Security Act entitles borrowers with most federal student loans to have their accounts put on administrative forbearance. That means no payments will be due. Payments were paused beginning March 13, 2020, with an end date of September 30, 2020. And not only do you get to stop making payments but interest also won't accrue during this time, so your loan balance won't get bigger.


If you already made a payment after the forbearance went into effect, you can ask for the money back from your loan servicer. And if you are working towards Public Service Loan Forgiveness and continue working for an eligible employer, the time your loans are in forbearance will count towards the 120 payments you must make to earn forgiveness.

While you can take advantage of this help, you don't have to. If you chose to make voluntary payments, the entire amount will go to the principal so you can repay your loan faster.

2. Prioritize payments on private student loans

Interest is not suspended on private student loans and there's no automatic forbearance available from private lenders during the pandemic. While most private lenders do offer some forbearance or are otherwise willing to work with borrowers who are struggling, they will still charge you interest if you have to pause payments.


If interest keeps accruing on your loans but you aren't paying it, your loan balance will only grow bigger. Not covering interest is one of the biggest mistakes student loan borrowers make as it can lead to a substantial increase in total debt. And if you make interest-only payments, you'll send money to your lender each month without seeing your principal balance go down.

To avoid increasing your debt, try to at least cover the interest costs during the pandemic – and aim to pay a little more so you make progress.

3. Talk to your school about financial assistance (and a room & board refund)

Refinancing your student loans to a lower rate could help provide the needed financial assistance you're looking for. A lower rate could mean lower monthly costs to you.

However, If you are still in school, talk with your school's financial aid office if your circumstances have changed. Financial aid administrators have the power to help you modify your FAFSA in special situations and potentially qualify for more help if you need it. You may become eligible for low-interest grants or need-based scholarships that don't have to be paid back.

If you paid for room and board on campus and your school is shut down, you may also be able to get back some of the money and use it to pay down your student loan balance. Or, if you need to live on campus because you can't afford alternative housing without borrowing more, your school might be able to help you work something out.

4. Aim to avoid a disruption to your educational program

Many schools are offering distance learning even if the campus is shut down. Make sure to fulfill your course requirements set by your school so you get credit for your courses and aren't delayed in graduating. If you don't, you could be forced to borrow more to pay for additional credit hours you need.


You'll also want to avoid dropping below half-time enrollment as this could accelerate your payback schedule and affect your eligibility for future federal aid if you need it. You don't want to jeopardize your ability to take out federal student loans, which are often more affordable than private student debt.

5. Use your stimulus funds or other government aid to make student loan payments

The CARES Act entitled most Americans to stimulus checks. However, college students who are claimed as dependents on someone else's tax return won't get this money. If you do, consider using it to pay down your student debt if you don't need it to pay bills.

If you don't get a stimulus check but were working, you might be able to qualify for other aid such as expanded unemployment benefits. Be sure to explore your options for help and, if possible, use the money the government provides to make at least minimum payments on student loans.