According to recent figures from the California Department of Forestry and Fire Protection, the raging wildfires in Los Angeles have obliterated at least 12,000 homes, buildings, and other structures. If you find yourself affected by these devastating fires, you might be eligible for financial relief designed for natural disasters, which also includes relief from your student loan obligations.
If you have federal student loans and reside in one of the ZIP codes identified by the Federal Emergency Management Agency (FEMA) as a disaster area, you may temporarily halt your payments for up to 90 days through a natural disaster forbearance. Additionally, there are relief options available for those with private student loans, current college students, and federal borrowers residing outside a FEMA-designated zone.
Here’s how you can seek assistance with your student loans if the L.A. wildfires or other natural calamities have affected your circumstances.
If you have federal student loans, it’s crucial to stay informed by keeping an eye on your email and student loan accounts. Make sure you have enabled email notifications within your student loan servicer account and your studentaid.gov account in case accessing regular mail becomes difficult. Regularly check your inbox for updates from the Education Department and your loan servicer, as they tend to reach out to affected borrowers soon after a disaster, according to Celina Damian from the California Department of Financial Protection and Innovation.
Scott Buchanan of the Student Loan Servicing Alliance advises against updating your permanent address if you’ve been displaced by wildfires, to ensure it remains in a FEMA disaster zone, qualifying you for a natural disaster forbearance.
Choosing a natural disaster forbearance could be beneficial if you truly need it. Buchanan mentions that your servicer might place your loans in forbearance if you live in a FEMA-designated disaster area and miss a payment. This would pause your payments for up to 90 days and shield you from default. Alternatively, you can proactively contact your servicer to request a forbearance, which doesn’t require additional paperwork. However, if you are able to continue making payments, it might be wise to avoid a forbearance because interest will accumulate, increasing your total debt.
Buchanan also notes that opting for this relief option should be considered carefully: it’s a useful respite for those financially impacted, but if you’re not facing dire financial difficulties, it might lead to paying more in the long run. Furthermore, months under natural disaster forbearance can count towards the 10-year Public Service Loan Forgiveness (PSLF) program if you’re employed by a qualifying employer during this period, as stated by the Federal Student Aid office.
There are additional federal student loan relief options beyond FEMA-designated zones. Any borrower can reach out to their servicer for a general forbearance, lasting up to a year, or an unemployment deferment if they’ve lost their job, available for three years. While interest may accumulate during these breaks, they will not help you progress toward loan forgiveness.
Income-driven repayment (IDR) plans can significantly lower your monthly payments, even to $0 if your income has dropped. Unlike general forbearance or deferment, these plans ensure you’re still working toward loan forgiveness, irrespective of payment amounts. If you’re already on an IDR plan and your income has decreased, contact your servicer to get your payments updated.
For those with private student loans, communicating with your lender is vital to explore relief possibilities. “Every private loan is unique, and their disaster relief offerings vary,” says Betsy Mayotte from The Institute of Student Loan Advisors (TISLA). For example, Ascent offers a three-month emergency forbearance and Earnest provides financial hardship forbearance for up to a year. Be mindful that interest may increase, adding to the principal balance and raising monthly payments thereafter.
If you choose a private loan forbearance, try to make interest-only payments to prevent capitalization.
For current students, contact your school’s financial aid office if the fires have impacted your family’s finances. They can potentially reassess your financial aid, adjust your aid package, or even extend your “in-school” status to delay loan repayment. Importantly, disaster-related support from government sources won’t affect your FAFSA filings, so your financial aid won’t shrink due to such aid.
When seeking additional help with your student loans post-wildfires, start by contacting your servicer or lender. If you need further assistance, turn to resources such as:
– California’s Student Loan Empowerment Network provides one-on-one support for local borrowers.
– The student loan ombudsperson office assists California residents in unraveling student loan complexities. Other states may also offer similar services.
– Nonprofit organizations, such as TISLA, can offer guidance on relief options.
– Your alma mater’s financial aid office, which may still offer resources and advice long after graduation.
These resources can offer free help, so be wary of scams that charge fees for accessing student loan relief.
