How to get student loan relief after the L.A. wildfires

By Eliza Haverstock, NerdWallet

Wildfires have burned at least 12,000 homes, buildings and other structures in Los Angeles, according to the California Department of Forestry and Fire Protection’s latest estimates. If the L.A. wildfires have displaced or otherwise impacted you, you may qualify for natural disaster financial relief — including relief from student loan bills.

Borrowers with federal student loans who live in Federal Emergency Management Agency (FEMA)-designated disaster ZIP codes can pause their student loan payments for up to 90 days with a natural disaster forbearance. There are additional relief options for private student loan borrowers, current college students and federal borrowers who live outside of a FEMA-designated area.

Here’s how to get student loan help if the L.A. wildfires or other natural disasters have impacted you.

If you have federal student loans

Monitor your email and student loan accounts

Make sure you have email communications enabled in your federal student loan servicer account and studentaid.gov account, in case you can’t access regular mail.

Frequently monitor your inbox for any communications from the Education Department and your student loan servicer, who often contact affected borrowers shortly after a natural disaster, says Celina Damian, student loan servicing ombudsperson at the California Department of Financial Protection and Innovation.

If the wildfires displaced you from your home, don’t change your permanent address in your student loan accounts, says Scott Buchanan, executive director of the Student Loan Servicing Alliance. Your address must be in a FEMA disaster zone to qualify for a natural disaster forbearance, he says.

Opt for a natural disaster forbearance — if you need it

Your servicer will automatically put your loans in a natural disaster forbearance if you live in a FEMA disaster ZIP code and miss a student loan payment, Buchanan says. This will pause your bills for up to 90 days and prevent student loan default. Or, you can call your servicer to proactively request a natural disaster forbearance. No documentation is needed, he says.

But if you can afford to continue making student loan payments, consider skipping the natural disaster forbearance. Interest will build on your student debt during this period, increasing the amount you owe.

“It’s one of those things you should definitely take advantage of if you’re financially impacted, but if you’re not financially impacted, it’s probably something you may not want to do, because it’ll mean that you’ll actually pay more over a longer period of time,” Buchanan says.

Months spent in a natural disaster forbearance count toward the 10-year Public Service Loan Forgiveness (PSLF) finish line, so long as you’re also working for a qualifying employer during this time, according to the Federal Student Aid office’s website.

Understand other federal student loan relief options

You don’t need to live in a FEMA disaster ZIP code to get relief. Any borrower can call their servicer and request a general student loan forbearance for up to 12 months at a time. If you’ve lost your job, you can also request an unemployment deferment for up to three years. Interest will likely accrue during these periods, and you won’t make progress toward loan forgiveness.

Income-driven repayment (IDR) plans can also shrink your monthly bills to as low as $0 if you’ve lost some or all of your income. By choosing an IDR plan over a general forbearance or deferment, you’ll make progress toward loan forgiveness — even if you have $0 payments. If you’re already enrolled in an IDR plan and your income has decreased, call your servicer to get your payments adjusted.

If you have private student loans

Call your lender and avoid interest capitalization

Call your private student loan lender. Explain your situation, and ask about natural disaster relief options, such as a temporary forbearance.

“Every private student loan is different. Some will offer relief in cases of disaster and some may not,” says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors (TISLA). “The best thing that borrowers with private loans can do is to just communicate with their lender and see what might be available to them.”

For example, the lender Ascent offers a three-month Natural Disaster/Declared Emergency Forbearance. Earnest has a general financial hardship forbearance, good for up to 12 months. With both of these forbearance options, interest not only builds, but it may also capitalize — which means it is added to your original principal balance. You’ll pay interest on top of a larger balance after forbearance ends, increasing the amount you’ll pay monthly and over time.

If you opt for a private student loan forbearance, try to make interest-only payments before capitalization occurs.

If you are a current student

Contact your school’s financial aid office

Contact your school’s financial aid office and ask them to reassess your aid eligibility if the wildfires have affected your family’s finances. Notify them about any change in residence if you’ve been displaced. They may increase your aid package or direct you to your school’s emergency financial aid fund.

If the wildfires leave you unable to complete the school year, your financial aid office can also extend your “in-school” status, Damian says. This will prevent you from entering federal student loan repayment. (Generally, borrowers must start paying student loan bills six months after graduating, leaving school or dropping below half-time enrollment.)

You won’t have to report any disaster-related support your family receives from the federal or state government on future Free Application for Federal Student Aid (FAFSA) forms — so you don’t have to worry about your financial aid shrinking as a result of receiving these funds.

Get additional student loan help after the wildfires

Start with your servicer or lender if you have questions about your student loan relief options. If you still need help with a complex situation, consider reaching out to these resources:

• California’s Student Loan Empowerment Network. If you’re a borrower living in California, you can get one-on-one support from this organization, which is operated by the state’s Department of Financial Protection and Innovation. Call 888-774-2227 or fill out a form on its website.
• California’s student loan ombudsperson office. This office can help you navigate complex student loan issues if you live in California. Reach out through its online contact form. If you live elsewhere and face a natural disaster, a handful of other states also offer this service to residents.
• Borrower assistance organizations. Nonprofits like TISLA can help you understand your relief options.
• Your college’s financial aid office. Even if you left college years ago, your former financial aid office will likely be happy to offer resources and talk through questions about relief.

These resources are always free. Watch out for student loan scammers, who may try to charge you a fee to access student loan relief.

Eliza Haverstock writes for NerdWallet. Email: ehaverstock@nerdwallet.com. Twitter: @elizahaverstock.

The article How to Get Student Loan Relief After the L.A. Wildfires originally appeared on NerdWallet.