Administrative forbearance for federal student loans has been extended until the end of the year.
Since March 27, 2020 monthly federal student loan payment obligations were automatically suspended, as part of the $2 Trillion Stimulus Package known as The Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The suspension was set to expire at the end of September, however, President Trump signed an executive order on August 8th extending the forbearance until December 31st, 2020.
The administrative forbearance extension also includes the waiver of all interest on student loans held by the Department of Education. However, the executive order did not reference halted collection of federal student loan debt nor “counted” non-payments toward the 120 required monthly payments for Public Service Loan Forgiveness. Both of the latter benefits were included in the March CARES Act, but it is not entirely clear if they will also be extended past September. We will keep you updated on this!
Taking advantage of 0% interest
Many student loan borrowers have continued to make student loan payments over the past five months, despite the temporary pause to take advantage of the 0% interest. Paying off debt faster is best for people who can afford it, but nearly half of the U.S. population is jobless right now (as of July 31st, 2020). Before the pandemic, more than 40 million Americans owed an average of $30K (per person) in student loan debt. Considering nearly half of the U.S. is unemployed, 20 some million Americans will not have income to make payments. But even borrowers who are unemployed can enroll in income-driven repayment plans.
What are income-driven repayment plans?
Income-driven repayment (IDR) plans can lower monthly payments potentially down to $0 because they cap required monthly payments in proportion to a borrower’s discretionary income. Meaning if you are unemployed or don’t make enough income relevant to your debt, you may not have a monthly student loan bill. IDR plans are easy to enroll in and are a much better option than requested deferment or forbearance, or default!
How to enroll in an IDR plan
You’ll need to enroll in your selected IDR plan through the Federal Student Aid website. You’ll need to select which of the five income-driven plans you want to enroll in and then you’ll need to upload proof of income. The Federal Student Aid website links to the IRS website, however, if you’re receiving unemployment benefits right now, your income (or lack of) will be noted in your application. Once you confirm your application, it can take up to 60 days for approval so now is the perfect time to enroll, because once administrative forbearance ends, you’ll already be enrolled in a plan that is comfortable for you.
Not sure which of the five income-driven repayment plans is right for you? Not sure if you qualify? You may need to consolidate your loans before enrolling… Don’t worry, we got you! We can help you with all of the above. Simply sync your loans with our repayment and forgiveness tool and we’ll let you know which income-driven and/or forgiveness program(s) you’re eligible for! If you get stuck or have any questions, we’ll be right there to help. Our team is dedicated to solving the student loan debt crisis and we’d love to help you in any way we can!
Check out some of our recent success stories here.