This article has been condensed for length, but the original can be found at https://medium.com/@realworld/realworlds-comprehensive-guide-to-adulting-during-coronavirus-366ad2e8fb9b.
Last updated: 6/3/2020
So this isn’t the Spring we had envisioned — whether it’s your final semester of college, or business as usual at the office, we’re living indoor, socially-distanced lives. Though this means your jeans are being neglected and your loungewear game is on-point, there are a few tough realities that have emerged with coronavirus . As your experts in all things ‘adulting’ — we’re here with the 411 on the “real world” impacts of COVID-19 broken down by topic.
Not only is the Coronavirus causing a health crisis, but it’s triggered an economic crisis to follow suit. This means that any investments tied to the stock market might be in the red, companies are tightening things up to prepare to weather the storm, and jobs might be at stake depending on the industry you work in. The good thing is that this affects EVERYONE, and the government is working on a solution to ensure we’re able to make ends meet until we bounce back.
Two areas to pay attention to — Retirement Savings and Student Loans:
- IRA Contribution Deadline — The deadline to contribute to your 2019 IRA has been extended 90 days, meaning you might be able to max out that contribution and claim a tax reward. Contribution limits for 2019 are $6,000 for those under 50 years old, and $7,000 for those 50 years and older.
- Withdrawal Penalties — Normally there are penalties associated with dipping into your retirement account (IRA and 401k) before you turn 59.5. The CARES Act waives this penalty on early distributions up to $100,000 for Coronavirus-related needs. Your withdrawals will still be taxed over the years 2020, 2021, and 2022, unless you return the funds within 3 years.
In Federal Student Loans…
- Federal Loan Interest — The President has slashed interest on all Federal Student Loans, meaning that you’ll owe 0% interest on your loans for at least 60 days. This applies to anyone with student loans through the Department of Education (not private loans through banks or other financial institutions).
- Deferment and Forbearance — If you’re already 31+ days past due on federal student loan payments, you will automatically be moved to forbearance, meaning your payments will be reduced or delayed (deferment). Though loans in forbearance would normally still accrue interest, they will not at this time. Should you not already be 31+ days overdue with payment, but wish to apply for forbearance for the next few months you can! You just need to contact your loan servicer directly to request it, and then once approved you can stop making payments (for the time being).
- Grace Period — For seniors in college, you would normally have a grace period of 6+ months until you must begin repaying your loans. The government has yet to comment on whether this will be impacted by COVID-19.
- Change in Income — If you’re on an income-driven repayment plan and experience a change in income (or loss of employment), let your loan servicer know. They will work with you to develop a plan.
Updated 6/3 — The CARES Act has suspended all Federal Student Loan payments until 9/30/2020. The Heroes Act, a new piece of legislation (not yet passed), proposes suspending Federal Student Loan payments and interest until Sept 30, 2021. We’ll keep you up to date should that pass!
In Private Student Loans… Unfortunately none of these government protections apply to your loans. Your balance will continue to accrue interest and you will need to continue to make payments as usual.
Updated 6/3 — Some private lenders (Discover, Wells Fargo, and others) are allowing borrowers to pause payment, though interest will still accrue on the remaining balance. Several states have entered an agreement to provide a lifeline to struggling borrowers, and New York State has created it’s own agreement allowing forbearance for 90 days.
Student Loans and Credit — Additionally the three major credit bureaus (Equifax, Experian, and TransUnion) are offering free weekly online credit reports through April 2021. This is a great tool to check whether your credit score is being affected by deferred student loan payments. You can request your credit report here.
We will be continuing to update this list with new developments. If there is anything we missed or you have advice to share with our community, please reach out to us at firstname.lastname@example.org. Stay safe and wash your hands!