Federal Student Aid Speaks—Here’s The Official Guide To Student Loans And Coronavirus
Who wants the official answers about your student loans and Coronavirus?
Here’s what you need to know.
If you’ve followed all the latest headlines about your student loans and Coronavirus, it’s only natural to want the answers to the most popular student loan questions, especially all the changes related to Coronavirus. The CARES Act will impact your student loans in several ways. Federal Student Aid, which is part of the U.S. Department of Education and the nation’s largest provider of student aid, just provided official guidance on the CARES Act. Let’s dive in.
1. What are the major changes in the CARES Act for my student loans?
Among other benefits, the CARES Act provides through September 30, 2020:
2. When do these benefits begin and end?
March 13, 2020 to September 30, 2020.
3. Is the suspension of federal student loan payments automatic?
Yes. You don’t have to take any action.
4. Can I still make federal student loan payments if I want?
5. If I decide to make payments, what is my new payment amount?
You can continue to pay the same monthly amount. Or, as long as you’re in forbearance, you won’t be penalized for making a payment that is less than your usual monthly payment. Your payment will first be used to pay off any accrued interest prior to March 13, 2020 and then will pay your principal balance.
6. Which student loans get a 0% interest rate?
The following types of federal student loans owned by the U.S. Department of Education qualify:
- Defaulted and nondefaulted Direct Loans
- Defaulted and nondefaulted FFEL Program loans
- Federal Perkins Loans
Importantly, some Federal Family Education Loans (FFEL) are owned by private lenders (such as banks) and some Perkins Loans are owned by colleges and universities. Those student loans do not qualify for these benefits. Contact your student loan servicer to verify which student loans you have.
7. What if my FFEL or Perkins Loans are not owned by the Education Department?
You can consolidate your FFEL or Federal Perkins loans into a Direct Consolidation Loan. Then, you would be eligible for 0% interest. However, the interest rate on your Direct Consolidation Loan may be higher than your current student loans. Also, any outstanding interest will be capitalized (meaning it will be added to your principal balance). Contact your student loan servicer for federal student loan consolidation.
8. Will my federal student loans automatically be set to 0%?
Yes, and it’s effective March 13, 2020.
9. Will my private student loans also get a 0% interest rate?
No. The CARES Act only applies to federal student loans.
10. If I’m enrolled in an income-driven repayment plan, will my suspended payments count toward student loan forgiveness?
11. Will suspended payments count toward Public Service Loan Forgiveness (PSLF)?
You must have Direct Loans, been enrolled on a qualifying repayment plan prior to the suspension, and work full-time for a qualifying employer during the suspension period.
12. Should I turn off autopay?
Autopay (”auto-debit payments”) is suspended during the administrative forbearance. If you want to keep making payments, contact your loan servicer to opt out of administrative forbearance. Then, you can resume with autopay.
13. What if my student loan payment is debited anyway?
Any payment processed through autopay between March 13, 2020 and September 30, 2020 can be refunded. Contact your loan servicer to request that your payment be refunded.
14. Will my suspended payments count toward my student loan rehabilitation if I defaulted on my student loans?
15. What if my income changes, but I want to keep making federal student loan payments?
Contact your loan servicer to explore options. For example, you can enroll in an income-driven repayment plan. You can visit StudentAid.gov/idr to recalculate your monthly payment based on your new income. After September 30, 2020, income-driven repayment plan will be revised to the new payment amount.
16. My tax refund was taken to pay my defaulted federal student loan. Will I get a refund?
Yes, if your federal tax refund (or wages, Social Security benefits or disability benefits) was in the process of being withheld on or after March 13, 2020 and before September 30, 2020. You can contact the Education Department’s Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923).
Helpful Resources: What To Do With Your Student Loans
More Options For Your Student Loans
What else can you do to pay off your student loans more quickly and save money during this challenging period? Here are four options, all of which have no fees: