There's assistance available, even if you can't access federal relief. Before considering a missed payment, explore these steps to manage your student loans effectively.

There are various financial relief options for student loan borrowers, especially under the recent economic measures. While federal loans receive significant benefits, privately held loans may require different strategies if you're facing financial difficulties.

Here are eight actions to consider if you’re experiencing financial strain:

1. Determine Your Loan Type

First, identify whether you hold federal or private student loans, or a combination of both. Federal loans provide access to certain benefits under current relief programs.

“Knowing whether your loans qualify for relief is crucial,” advises a financial expert. “Your loan servicer can clarify which of your loans are federal or private.”

You can check your federal loans through the National Student Loan Data System. Borrowers with these types of federal loans automatically receive relief:

  • Direct loans
  • Federal Family Education Loan (FFEL) Program loans owned by the Department of Education
  • Perkins loans owned by the Department of Education

If you qualify, payments will be paused for six months with interest set to 0%. During this period, your accounts will be reported positively to credit agencies, benefiting those impacted by unemployment or reduced hours.

2. Consider Consolidating FFEL or Perkins Loans

Some older FFEL and Perkins loans may not qualify for the 0% interest rate or payment pause. A possible solution is to consolidate them into a federal Direct Consolidation loan, shifting ownership to the Department of Education and making them eligible for relief. Remember, only federal loans can be consolidated — private loans are not eligible.

Before proceeding, consult your servicer about potential changes to your loan terms. Consolidation might alter your interest rate and balance, possibly increasing your costs. Additionally, the timeline for loan forgiveness may reset.

3. Investigate State-Level Relief

Many states have negotiated with loan servicers to broaden relief options for borrowers. Now, those with private or commercially held FFEL and Perkins loans can request various forms of aid, including:

  • A minimum of 90 days of forbearance.
  • Waived late fees.
  • Temporary halts on debt collection lawsuits.
  • Accurate credit reporting.
  • Assistance with enrolling in additional aid programs.

Eligibility may vary, so review the specifics for your state and loan servicer. Current participants include states like California, Colorado, and New York, among others.

4. Reach Out to Your Private Loan Servicer

If you don’t fall under the new agreements, you still have options. Find your servicer's contact details on your bill or website. Most have specific COVID-19 resources outlining assistance available to borrowers.

Don’t skip this step. “Programs don’t start automatically if you miss payments without communication,” warns an expert. This could lead to late fees and negative credit reporting.

When you contact your servicer, explain your situation and how you've been affected financially. Many private lenders are willing to offer deferments of 60 to 90 days or other forms of relief.

Understand how forbearance works; you might be able to skip payments temporarily, but interest will continue to accrue, which can increase the overall loan cost.

5. Monitor Your Credit Reports

If you enter a forbearance program, ensure your credit reports accurately reflect this status. Lenders must report accounts as “current” while you are enrolled in hardship assistance due to COVID-19. This protection lasts for the duration of the emergency and for 120 days afterward. You can check your credit reports for free weekly until April 2021 to verify compliance.

6. Utilize Your Stimulus Payment

Thanks to recent financial measures, many individuals have received stimulus payments: $1,200 for individuals, $2,400 for couples, and $500 per child. If your servicer doesn’t provide satisfactory hardship options, consider using your stimulus payment to cover your student loan bills. If you haven’t received yours yet, here’s how to follow up.

7. Adjust Your Budget

Many lenders and service providers are offering assistance during this challenging time. Consider redirecting funds typically used for these expenses towards your loan payments to keep your account in good standing until you reach an agreement with your servicer.

8. Seek Help from a Credit Counseling Agency

A credit counselor can assist you in understanding your student loan relief options, help organize your documents, and communicate with your servicers. Many nonprofit agencies provide a free initial consultation, followed by possible fees.

“If you’re uncertain where to start, consulting a financial professional is a wise step,” an expert suggests. “The urgency of financial challenges can be overwhelming, so talking to someone can clarify your options.”