Yup, you read correctly— through Sept 30th of 2020, payments for federal student loans will be suspended. What do you need to know? President Donald Trump signed the CARES Act— this is a 2 trillion dollar boost package that brings an economic relief due to the COVID-19 pandemic disaster. It includes several benefits for student loans, all of these are to help you with your financials that have been affected by the pandemic emergency.
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No payments through September 30th of 2020
Again, YES, this is correct! You have the opportunity to stop your student loan payments through Sept 30th. You can choose this option or don’t— its up to you— no late fees or penalties will be applied.
Keep in mind, this option is only for Federal Student Loans that are owned by government agencies, it doesn’t mean you can stop paying any other student loan you may have. It doesn’t include private agency student loans or FFEL.
No interest will be added on your federal student loan through September 30th. What this means is that for the period of Sept 30, you will have a 0% interest rate and no new interests will be added to your balance. Again, this will only apply to Federal Student Loans.
Debt Collection Stopped
Tax refunds, wages and Social Security benefits won’t be withheld to pay for federal student loans during this period of time. Student loan debt collection has been stopped for 60 days— this doesn’t mean that the federal government will forget about the defaulted debt, rather than just suspended the collection efforts during this time.
No negative impact on your student loan forgiveness
This means, if you decide to put a pause on your FDL during September 30th, the government will count this time as part of your required forgiveness program, including public services loan forgiveness.
Questions you might be asking yourself!
1. If I stop paying, does that mean the federal government paying my student loans for me?
Negative! Your federal student loan balance will not change— think of this as a vacation from your payments. Then again, vacations ultimately have an ending and you have to come back to reality.
2. Are all my FDL interest being waived?
Negative! If you currently have any interests pending, they will remain. Remember, what’s being waived is new interest that would have been applied during the period of September 30th, 2020.
3. Can I still make payments if I want to?
Correct! You can continue your federal student loan payments if you want, interest rate will be 0%, but your monthly payment will be the same.
4. How much student loan forgiveness will I get?
Despite different proposals from Senate, House Democrats and others, the CARES Act does not currently include any student loan forgiveness.
5. If I stop making payments on my federal student loans, I won’t qualify for public service loan forgiveness?
Because this legislation is new, many student loan services websites have not yet been updated and it may seem that you won’t be able to qualify. Make sure you know how to get disqualified for student loan forgiveness and remember all of these apply to Federal Student Loans only, NOT private loans.
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