The response to the coronavirus pandemic from State and Federal governmental agencies, not-for-profit organizations, private industry and essential workers has been unprecedented. And, although not perfect, I strongly believe our collective efforts are headed in the right direction.
A provision of the recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act, which we have not covered in prior communications, 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.
Excerpts from the Bureau's blog regarding this provision are provided below:
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.
Someone contacted me to pay a fee to suspend my payments. Is this a scam?
Yes! The federal government will not ask for a fee to suspend your payments. There is no action required of you. If someone asks for money to process this information, it is a scam and you should report them to the
FTC’s complaint assistant.
As always, please do not hesitate to reach out to me or a member of my team if you have questions on this provision or any other aspect of the government stimulus.
We continue to monitor developments across a number of areas including public policy, medical advances and financial markets to ensure we are doing everything in our power to provide you with support, guidance and reassurance doing this challenging time.
Warm Regards,
