How to Get Student Loan Relief After the L.A. Wildfires

Los Angeles has been devastated by wildfires, destroying over 12,000 homes and structures, as reported by the California Department of Forestry and Fire Protection. If you have been affected by the L.A. wildfires, you may be eligible for financial relief due to natural disasters, including assistance with student loan payments.

Federal student loan borrowers residing in Federal Emergency Management Agency (FEMA)-designated disaster ZIP codes can request a natural disaster forbearance to pause their loan payments for up to 90 days. Other relief options are available for private student loan borrowers, current college students, and federal borrowers outside of FEMA-designated areas.

If you have been impacted by the L.A. wildfires or other natural disasters, here are steps you can take to receive assistance with your student loans.

Ensure that you have email notifications enabled in your federal student loan servicer account and studentaid.gov account in case you cannot access regular mail.

Regularly check your email for updates from the Education Department and your student loan servicer, as they often reach out to affected borrowers soon after a natural disaster, advises Celina Damian, student loan servicing ombudsperson at the California Department of Financial Protection and Innovation.

If the wildfires have forced you to leave your home, do not change your permanent address in your student loan accounts, according to Scott Buchanan, executive director of the Student Loan Servicing Alliance. Your address must be within a FEMA disaster zone to qualify for a natural disaster forbearance.

If you reside in a FEMA disaster ZIP code and miss a student loan payment, your servicer will automatically place your loans in a natural disaster forbearance, states Buchanan. This will halt your payments for up to 90 days and prevent student loan default. Alternatively, you can proactively request a natural disaster forbearance by contacting your servicer. No documentation is required.

If you have the means to continue making student loan payments, it may be advisable to forgo the natural disaster forbearance. Interest will accrue on your student debt during this period, leading to an increase in the total amount owed.

Time spent in a natural disaster forbearance counts towards the 10-year Public Service Loan Forgiveness (PSLF) eligibility, as long as you are also employed by a qualifying employer during this period, as per the Federal Student Aid office’s guidelines.

You do not necessarily need to reside in a FEMA disaster ZIP code to qualify for relief. Any borrower can contact their servicer to request a general student loan forbearance for up to 12 months. In cases of job loss, you can also apply for an unemployment deferment for a maximum of three years. Interest will likely accumulate during these periods, and progress towards loan forgiveness may be impacted.

Income-driven repayment (IDR) plans can reduce your monthly payments to as low as $0 if your income has decreased. Opting for an IDR plan over a general forbearance or deferment allows you to progress towards loan forgiveness, even with $0 payments. If you are already enrolled in an IDR plan and experience a decrease in income, contact your servicer to adjust your payments accordingly.

Reach out to your private student loan lender to discuss your situation and inquire about relief options related to natural disasters, such as a temporary forbearance.

Betsy Mayotte, president and founder of The Institute of Student Loan Advisors (TISLA), emphasizes the importance of communication with private lenders to explore available assistance options in case of a disaster.

For instance, Ascent offers a three-month Natural Disaster/Declared Emergency Forbearance, while Earnest provides a general financial hardship forbearance for up to 12 months. With these forbearance choices, interest may not only accrue but also capitalize — resulting in an increase in your principal balance. Making interest-only payments before capitalization is recommended if you opt for a private student loan forbearance.

Consider making interest-only payments before capitalization to minimize the impact on your overall loan amount.

Inform your school’s financial aid office of the impact of the wildfires on your family’s financial situation. If you have been displaced, update them on your new residence. They may adjust your financial aid package or guide you towards emergency financial aid resources at the school.

In the event that the wildfires prevent you from completing the academic year, Damian suggests that your financial aid office can extend your “in-school” status, delaying the start of federal student loan repayment. Typically, borrowers are required to begin repaying student loans six months after graduation, leaving school, or dropping below half-time enrollment.

Any disaster-related support received from federal or state government sources does not need to be reported on future Free Application for Federal Student Aid (FAFSA) submissions, ensuring that your financial aid remains unaffected.

Begin by contacting your servicer or lender for queries regarding student loan relief options. If you require assistance with a complex scenario, consider reaching out to the following resources:

• California’s Student Loan Empowerment Network offers one-on-one assistance to California residents, operated by the state’s Department of Financial Protection and Innovation. Contact them at 888-774-2227 or through their website.

• California’s student loan ombudsperson office can assist California residents with student loan issues. Reach out through their online contact form. Some other states also provide this service to residents facing natural disasters.

• Borrower assistance organizations like TISLA provide guidance on relief options.

• Your college’s financial aid office can offer resources and assistance even if you are no longer enrolled. Reach out for guidance on relief options.