On August 8, 2020, the president issued a student loan order. This includes language extending student loan relief for federal student loan borrowers until December 31, 2020.
You can find out more detailed information at the White House government site. This mainly applies to specific federally held loans (you can read more here if your loans will qualify).
This is an extension of some of the student loan relief provided by the CARES Act (which ends on September 30, 2020). The Department of Education has had to provide guidance on how this will apply in specific instances (e.g., income-driven repayment plans). We will continue to update our users as things change.
Below, we have a quick summary of what this could mean for our users who are currently making payments on their student debt:
- Your interest rate is automatically being set at 0% from October 1, 2020 through December 31, 2020: during this time period, interest will not accrue (i.e., accumulate) on your loans. The adjustment will be effective from October 1, 2020.
- Your payments will automatically stop from October 1, 2020 through December 31, 2020: you will be automatically placed in an administrative forbearance during the COVID-19 national emergency. This allows you to temporarily stop making your monthly loan payment. The suspension of payments will last until December 31, 2020, but you can still make payments if you want to.
- You will still get credit for on-time monthly payments during this period: even though the payments are suspended, the Department of Education will still be reporting monthly payments, and will be better for your credit score.
- You can continue to make payments on your student debt: and the payments during this period will be applied to principal once all the interest accrued prior to October 1, 2020 is paid off. You can either contact your loan servicer to get out of administrative forbearance (and your payments will resume) or you can make manual payments during this period.
- Your auto-debit payments are suspended during the administrative forbearance: and any payments processed between October 1, 2020 and December 31, 2020 can be refunded back to you through your loan servicer.
- Suspended payments for income-driven repayment (IDR) plan or a public service loan forgiveness program (PSLF) will still count during this period: and for PSLF specifically, if you have a Direct Loan, were on a qualifying plan prior to the suspension, and work full-time for a qualifying employer during the suspension, you will still receive credit.
Check to see if your loans qualify for these benefits, and reach Snowball Wealth at anytime.
Snowball Wealth is an app that helps you see how much you are paying in interest and come up with a plan to pay off your debt! Sign up here: snowballwealth.com