COVID-19 federal student loan suspension

by Kaitlyn Ugoretz, Funding Peer
Thursday, April 23, 2020 9:15 AM

In response to the extreme financial distress that the COVID-19 pandemic is causing throughout the country, the United States federal government has taken steps to reduce the burden on current and former students with federal loans by signing into law the CARES Act. The CARES Act suspends federal student loan payments starting March 13, 2020 through September 30, 2020. 

How does this work?

Borrowers are automatically being placed in an administrative forbearance, which allows you to temporarily stop making your monthly loan payment with no penalties or interest capitalization. You can still make payments if you choose to by contacting your loan servicer.

Public Service Loan Forgiveness:
If you have a Direct Loan, were on a qualifying repayment plan prior to the suspension, and work full-time for a qualifying employer during the suspension, then you will receive credit toward PSLF for the period of suspension as though you made on-time monthly payments.

Income-Driven Repayment Plan
: Borrowers currently on an Income-Driven Repayment Plan will have suspended payments count toward IDR forgiveness.

Defaulted Loans:
If your student loans are in default, the federal government will not withhold money for defaulted student loans from your federal income tax refunds, Social Security payments, or other federal payments including the rebate payments also included in this bill for a period of at least 60 days (starting March 13, 2020).

Private Student Loans: The federal government has not taken any action on behalf of private student loan borrowers. Some lenders are offering relief options, so you should contact your lender if you are struggling to make payments or have any other questions.

More information can be found ‚Äčhere.