KEY TAKEAWAYS
- Federal student loan borrowers can get some relief from payments if they live in areas where the Southern California wildfires caused up to $275 billion in damages and economic loss.
- Residents of one of the Federal Emergency Management Agency (FEMA)- designated areas can request a three-month forbearance from their loan servicer.
- This pause in payments can provide a lifeline to borrowers affected by the wildfires, but interest for student loans will still accrue while in forbearance.
If you live in an area affected by the California wildfires, you may qualify for temporary relief from federal student loan payments.
The wildfires, which began in early January, have caused Southern Californians up to $275 billion in damages and economic loss as of Jan. 13, according to AccuWeather. Residents of one of the Federal Emergency Management Agency (FEMA)– designated areas can request disaster assistance through the federal government. Most federal student loan borrowers located in these areas can have their payments paused for at least 90 days by their servicer.
Federal student loan servicers are keeping up with FEMA updates and will reach out to borrowers to share disaster relief options, the Department of Education said. In some cases, loan servicers will automatically place borrowers who missed a payment and whose ZIP code was in a disaster area into forbearance, said Megan Walter, senior policy analyst with the National Association of Student Financial Aid Administrators.
“The best practice, I would say, for borrowers who are affected and are in that disaster ZIP code would be to contact your servicers the second you realize you’re not going to be able to make that payment and request the 90-day forbearance,” Walter said.
This three-month forbearance can be extended for up to a year, but borrowers should be aware that interest will still accrue, and the months spent in forbearance do not count toward loan forgiveness.
“If you can pay, generally, my advice would be: continue to pay,” Walter said. “If you know you can’t pay, the forbearance is going to be better than just going delinquent on your loans.”
Additionally, some private loan servicers have disaster relief programs for borrowers. However, the options for private loan servicers vary compared to those of federal servicers, and the relief may not be as generous, Walter said.