Test Your Knowledge of Federal Student Loan Interest and Payment Relief
In response to the economic effects of COVID-19, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. The act encompasses several provisions that offer relief for student loan borrowers. Interest and required payments on federal student loans owned by the U.S. Department of Education will be automatically suspended, without penalty, until September 30, 2020. If, however, borrowers wish to continue making repayments on their loans, they may do so.
Which of the following is not true about the federal student loan relief?
- The interest waiver and suspension of required payments will be automatically applied to applicable federal student loan accounts through the loan service provider.
- Retroactive to March 13, 2020, interest will not accrue on applicable federal student loans through September 30, 2020.
- Federal student loans owned by the U.S. Department of Education are included. Loans excluded from this relief program include federal student loans held by a commercial lender or by a school directly, as well as private student loans.
- If you choose to continue making monthly loan payments, you can’t change your payment amount.
If you choose to continue monthly student loan repayments during this time, you can increase or decrease the amount of the payment by contacting your loan service provider. Due to the interest waiver, however, the full amount of your monthly payments made during the suspension period will apply to the principal balance of your loan.
There is good news for individuals working toward Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness (TLF). Despite the suspension of required payments, each month through September 2020 will continue to count toward the PSLF program. For teachers in the TLF program who are unable to finish the teaching year as a result of the COVID-19 pandemic, the partial year will count as a full year.
Debt collection for federal student loans owned by the U.S. Department of Education is suspended until September 30, 2020. This suspension applies to garnishments on wages, tax refunds, and social security benefits.
If your loans aren’t included in this relief program, and your income has been reduced or you are facing challenges during this time, reach out to your loan service provider for assistance in evaluating your options. Additional information about student loans is available on the U.S. Department of Education website and through your loan service provider.