Congress has recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2.2 trillion stimulus packaged to help the U.S. economy through the COVID-19 pandemic, otherwise known as coronavirus. This is the most expensive measure that has been passed in American history.3
As a result of the pandemic, cities are on pause and unemployment is through the roof. The CARES Act was designed to provide relief for individuals and businesses who have been negatively impacted by the outbreak.
How the CARES Act affects your student loans:
Payments for federal student loans will be put in forbearance until September 20, 2020, meaning you do not have to make payments if you are a borrower with federally-owned student debt. Your payments will be automatically suspended until September 20, 2020.2
No interest will be accrued on this time period, and you will not receive any negative marks on your credit report.1
Collections on delinquent federal loans will also be suspended during this time. If your wages are being garnished, that will also stop for this six-month period. If your loans have defaulted, tax refund reductions will also cease.2
The government is also returning $1.8 billion in refunds to 830,000 borrowers whose loans were defaulted and went through debt collection since the national emergency was declared.3
If you are eligible for the Public Service Loan Forgiveness program, the next six months will count towards your 120 payments. If you are in a loan rehabilitation program, you’ll also be counted as paying on time.2
The CARES Act does not include any direct student loan forgiveness for borrowers.1
If you have private student loans or if you are a borrower with federally guaranteed loans held by private companies, you are not qualified for any relief from the CARES Act.2 You will have to continue with your payments. Contact your lender and make other arrangements if need be.
1Friedman, Zack. “Here’s The ‘Secret’ Way To Get Student Loan Forgiveness From The New Coronavirus Stimulus Package.” Forbes, Forbes Magazine, 30 Mar. 2020, www.forbes.com/sites/zackfriedman/2020/03/29/student-loan-forgiveness-coronavirus/#633837707710.
2Rowan, Lisa. “Here’s the New Coronavirus Student Loan Plan.” Two Cents, Two Cents, 30 Mar. 2020, twocents.lifehacker.com/heres-the-new-coronavirus-student-loan-plan-1842560767.
3Swaminathan, Aarthi. “Coronavirus Stimulus Bill: 7 Ways Student Loan Borrowers Benefit.” Yahoo! Finance, Yahoo!, 29 Mar. 2020, finance.yahoo.com/news/coronavirus-stimulus-bill-student-loans-183648839.html.