On March 27, 2020, The $2 Trillion Stimulus Package known as The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted.
The Stimulus Package impacts many Americans, including those with student loan debt. Under the CARES Act, all student loan borrowers with eligible federal student loans, will have their monthly payment obligation automatically suspended through September 30, 2021.
This means these borrowers may take a break from making their required monthly payments, without incurring interest or penalties until September 30, 2020.
Borrowers do not need to call or request this suspension, as it is automatic. Beginning Aug. 1, 2021, the U.S. Department of Education will begin notifying borrowers when normal payment obligations will resume.
This sounds pretty helpful if you’ve been hit economically due to COVID-19. Here’s what you need to know:
Which loans does the CARES Act apply to?
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
- Federal Family Education Loan Program (FFELP) transferred to the Department of Education
The following loans are not eligible under the CARES Act:
- Federal Perkins Loans managed by universities.
- Federal Family Education Loan Program (FFELP) Loans managed by banks and other financial institutions.
- Private Loans
Will this affect progress toward loan forgiveness?
- Not negatively. Under the CARES Act, suspended payments will count towards PSLF and TLFP.
Reduce your monthly payments
- If you can still make payments, but need to lower your monthly payment, consider enrolling in an income-driven repayment plan. These plans will cap your required monthly repayment in proportion to your income. And, depending on your financial situation, you may pay as little as $0. Use our Discover Tool to find an income-driven repayment plan that is right for you.
- Help spread the word by sharing this with everyone you know that could benefit from paused or lower student loan payments. Stay Chipper and healthy!