Here Is the Student Loan Plan for the Novel Coronavirus
When President Trump signed the $ 2 trillion coronavirus stimulus bill last week, items like recovery rebate checks and extended unemployment benefits received the most early attention. But on page 825 you will find a new set of rules for waiving student loan payments.
This is confusing because President Trump and Education Secretary Betsy Devos previously announced changes in payments and interest on federal student loans during the coronavirus pandemic. Here’s what you need to know about the latest posting round, which replaces previous ads.
Federal student loan payments will be deferred until September 30, 2020. This is automatic – you don’t need to do anything to request a suspension of your payments.
No interest will be charged on suspended federal loans. You will not receive negative ratings on your credit report: during this time, your loans will be marked as paid.
If you are eligible for the Public Service Loan Forgiveness program , the next six months will count towards your 120 payments. If you participate in a loan rehabilitation program , you will also be paid on time as required to complete the program.
All collection on late federal loans will cease during this period. If your wages are paid off due to an outstanding loan, it will stop for that six month period. If your tax refund is reduced due to unpaid loans, you will not experience this during this period. (If you’ve already filed your 2019 tax return, you probably won’t get this benefit.)
You can still make payments against your principal if you want to lower your balance now and pay less interest when payments are resumed.
If you have private student loans, this abstinence program does not apply to you. You will have to continue paying as usual unless you agree with the lender.
Beginning August 1, the Department of Education will send at least six notices by mail, phone, or email to indicate when your regular payments will resume and your options for participating in the income- driven repayment program .
The Department of Education has a link to a guide for borrowers of federal student loans during the coronavirus pandemic, but it has not yet been updated with the latest adjustments to the suspension of payments program.
If you have questions about what these benefits mean for your loans or your specific circumstances, please contact your loan agent.