The CARES Act and Student Loans
CARES Act – Student Loans
Student loan borrowers now have more benefits to consider when planning for the potential financial impact from coronavirus. A new federal law, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, provides automatic suspension of principal and interest payments on federally-held student loans through September 30, 2020. These suspended payments will count towards any student loan forgiveness program, as long as all other requirements of the loan forgiveness program are met.
Here are some key things you need to know about how this may affect you.
Do I need to apply to suspend my payments or interest on my federally-held student loans?
No. From March 13 through September 30, 2020, the interest rate is set to 0% and payments are suspended for student loans owned by the federal government. Your federal student loan servicer will suspend all interest and payments without any action from you. You do not need to contact your student loan servicer.
If you made a payment toward your federally-held student loans after March 13, you can request a refund from your student loan servicer. However, if you are financially able to make payments or continue making payments on your student loans, any payments you made or make after March 13 will be applied directly to principal. This will help you pay off your loans faster.
Are interest and payments suspended on all of my student loans, including my private student loans?
No. The suspension of payments applies only to student loans that are held by the federal government, which are the vast majority of student loans issued since 2010.
Some federal student loans under the Federal Family Education Loan (FFEL) Program are owned by commercial lenders, and some Perkins Loans are held by the institution or school you attended. Your FFEL lender or school may choose to suspend interest and payments on a voluntary basis, but they are not required by law to do so. You can contact your servicer to find out if these options are available to you.
The benefits authorized by the CARES Act also do not apply to private (non-federal) student loans owned by banks, credit unions, schools, or other private entities. Many private student loan lenders are offering extended forbearance options and other benefits. Contact your lender or servicer for more information. ***
Gov. J.B. Pritzker said Tuesday that relief is coming for Illinois residents paying private and non-federal student loans who are not covered by the CARES Act.
Pritzker said, this newly approved relief allows borrowers to request a 90-day forbearance, waive late fees, give no negative credit reports, pause debt collection lawsuits for 90 days and offer enrollment in other borrower assistance programs.
Services include MOHELA, Navient, Nelnet, Edfinancial, Lendkey Technologies, Upstart and others.****