Are Student Loans Frightening You? Deferrals. Forbearances. Zero-Interest. No Payments. Capitalization. Is all this true? What does this mean for me? Is this hurting my credit score? Can I still make payments? Do I have to request this?
Student loans always have a lot of questions surrounding them and the government’s response to the coronavirus added some new ones. Student loans are a large debt for most households and can be a source of stress for many. We have summarized what the coronavirus response means for FEDERAL student loans. We recommend staying up to date using https://studentaid.gov/announcements-events/coronavirus and by talking to your loan servicer.
March 20, 2020 – The office of Federal Student Aid to suspend loan payments, stop collections on defaulted loans, and set the interest rate to 0% for 60 days on their federal student loans.
March 27, 2020 – The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) extended the direction until September 30, 2020.
August 8, 2020 – The government decided to extend the suspended payments, stopped collection activity, and waived interest until December 31, 2020.
What does that mean for you?
- You do not owe a monthly payment on your FEDERAL student loans. You can request a refund if you made a payment between March 13, 2020, and December 31, 2020.
- They will not report you late if you are not making payments. This means it will not impact your credit score.
- The suspended payments count towards the Public Service Loan Forgiveness (PSLF) Program and Income-Driven Repayment (IDR) forgiveness
- If you are in a rehabilitation program to bring your student loans current, the suspended payment will count towards the rehabilitation
- You can apply to start rehabilitating your student loans and the suspended payment will count from the point you start the rehabilitation plan
- Your student loans will NOT incur any new interest.
- You can continue to make payments towards your student loans. Once you pay the interest accrued before March 2020, you will be paying down the principal amount borrowed.
- If your income has changed during COVID you can apply to lower your payments for after the suspended payments are over.
- You do not have to recertify your income until after December 31, 2020.
- There is NO fee for the suspension or 0% interest.
Are Student Loans Frightening You? For more information, contact CCCS.