The CARES Act provides automatic suspension of principal and interest payment on federally held student loans through September 30, 2020. An Executive Order directs the Department of Education to extend these benefits until December 31, 2020.
Important facts about student loans
- The interest and monthly payments on federally held loans are suspended through September 30, 2020.
- Consumers do not need to contact their student loan servicer or take any action on federally held student loans.
- Make sure the servicer has up-to-date contact information and check your mail or email in order to receive any updates or information about your loans.
- Suspended payments through September 30, 2020 will count towards any student loan forgiveness program, as long as all other requirements of the loan forgiveness program are met.
How do I know if I qualify?
The student loan payment and interest suspension only applies to federal student loans held by the Department of Education. Some federal student loans under the Federal Family Education Loan (FFEL) Program are owned by commercial lenders and some Perkins Loans are held by the institution or school you attended. Your FFEL lender or school may choose to suspend interest and payments on a voluntary basis, but they are not required by law to do so. If you need more information contact your servicer to find out if these options are available to you. Use the link https://studentaid.gov/manage-loans/repayment/servicers to see the list of federal student loan servicers.
What should I do if I have federally-held student loans?
You don’t need to take any action. From March 13 through September 30, 2020, the interest rate is set to 0% and payments are suspended for student loans owned by the federal government. It is suggested, however, to make payments or continue making payments on your student loans, if you are financially able to do so. Any payments you make after March 13 have been applied directly to principal. By doing this it will help pay off your loan faster.
What should I do if my student loan is already in default?
The CARES Act requires the Department of Education to stop the collection of defaulted federal student loans, including garnishment of wages and the offset of tax refunds and Social Security benefits, through September 30, 2020. There is no additional action required from the consumer for federally owned loans. Contact your loan holder to find out about your options regarding other defaulted federal loans you may have. Use this link https://studentaid.gov/manage-loans/default/get-out to learn how to get out of default.
What should I do if I have private student loans?
Many private lenders have already implemented forbearance options that allow borrowers to postpone monthly payments. Some of the private lenders also are waiving late fees and will not file negative reports to consumer reporting agencies. Additionally, private lenders also offer their own reduced payment options. Contact your student loan servicer to find out what is available to you.