What Does the CARES Act Mean for my Student Debt?
On March 27, 2020 the president signed the CARES Act into law. This includes several provisions to provide relief for federal student loan borrowers.
You can find out more detailed information at the Federal Student Aid (the Department of Education’s website) and with your loan servicer on how these will exactly be implemented. These provisions mainly apply to specific federally held loans (you can read more here if your loans will qualify).
Below, we have a quick summary of what this means for our users who are currently making payments on their student debt:
- Your interest rate is automatically being set at 0% from March 13, 2020 through September 30, 2020: during this time period, interest will not accrue (i.e., accumulate) on your loans. The adjustment will be effective from March 13, 2020.
- Your payments will automatically stop from March 13, 2020 through September 30, 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 September 30, 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 March 13, 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 March 13, 2020 and September 30, 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 any time!
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