COVID-19 impact to your student loans
Stay tuned, stay safe, stay healthy — stay the course on your student loans
— UPDATE, March 27, 2020 —
Today, the House passed and the President signed the “CARES Act.” Within this $2.2 trillion package likes a relatively small but extremely beneficial provision titled “Temporary relief for federal student loan borrowers.”
Anyone with federally held Direct or Federal Family Education Loans will automatically receive a suspension of payments due through September 30, 2020.
During the suspension, there will be NO accrual of interest. This provision is in addition to the previous student loan interest waiver that took effect March 13, 2020.
You will also receive credit for each month of suspension as if you had made a payment for the purpose of forgiveness — both public service loan forgiveness or income-driven repayment forgiveness. This suspension is much more beneficial than a forbearance or deferment. You should keep your student loans in repayment under this suspension rather than requesting a deferment or forbearance.
There will be no negative reporting to consumer reporting agencies during the suspension and your federal held loans will be considered in good standing.
Within the next 15 days, you will receive notice from your loan servicer of federal held student loans regarding the payment suspension and interest waiver. You have the option to continue making payments during the suspension period. Any payments would first be applied to existing unpaid interest, outstanding fees, then principal.
Whether or not you should continue to make payments during this suspension will depend on the specifics of your circumstances. For example, if you are using income-driven repayment and planning for forgiveness, it doesn’t make a lot of sense to make payments during this suspension — enjoy the break in payments and use your extra funds to weather the economic impacts of the pandemic.
However, if you are using a standard or extended repayment plan and your situation allows you to make payments during the suspension, you’ll make a dent in your principal and reduce the time and interest cost for the duration of repayment.
