The COVID-19 pandemic is making it even more likely that borrowers will have no choice but to default on student loans. The CARES Act suspends student-loan payments through September 2020, though borrowers can choose to continue paying on their loans.[1]

Interest rates on student loans owned by the federal government are currently set to 0% through September.[2] Private loans, and loans owned by entities other than the federal government are not covered by the CARES Act.[3] And that can cause some financial stress when your hours and pay have been cut due to the pandemic.

As of the end of 2019, the national student-loan-debt balance was estimated at $1.59 trillion dollars.[4] That’s more than the total auto-loan debt in the United States ($1.13 trillion) or credit-card debt ($1.04 trillion).[5] The average student-loan debt for college in the United States is about $30,000, but that can be much higher, especially with a graduate school education.

Defaults can wreak havoc on your credit score, making it harder to get out of debt. In general, student-loan debt is not dischargeable in bankruptcy. Student loans can be complicated. Some of us, like the author of this blog post, have a larger student-loan payment than mortgage payment. Because a defaulted student loan can have serious consequences, you should talk to an attorney, even if just to understand your options.

Ultimately, the choices you make today could mean tens or hundreds of thousands of dollars in the long term. And even if you’ve already defaulted, an attorney who understands student-loan debt may be able to help you get back on the right track or even some relief from the debt.

Call us today so we can help.

[1] Federal Student Aid, Coronavirus and Forbearance Info for Students, Borrowers, and Parents, https://studentaid.gov/announcements-events/coronavirus (last visited May 26, 2020).

[2] Id.

[3] Kim Porter, Do Private Student Loans Qualify for Coronavirus Relief? U.S. News and World Report https://loans.usnews.com/do-private-student-loans-qualify-for-coronavirus-relief (May 19, 2020).

[4] See e.g., Maurie Backman, Student Loan Debt Statistics for 2019, The Motley Fool.com, https://www.fool.com/student-loans/student-loan-debt-statistics/ (Feb. 20, 2020) (last visited May 26, 2020).

[5] Id.