FAQs on the CARES Law and Student Loan Debt
Wrong. People 50 and over bear about 20 percent of the nation’s student loans, and since 2004, student loan debt for those 60 and over has grown faster than any other group of people. age. Individuals have incurred student debt not only for their own education, but also for the education of their children and grandchildren.
Is the government doing anything to help me with my student loans during the coronavirus outbreak?
The CARES Act, the sweeping stimulus legislation enacted in March, includes relief for student loan borrowers. Under the new law, no payment is required on federal student loans held by the US Department of Education between March 13, 2020 and September 30, 2021. In addition, interest on these federal student loans will automatically fall. to zero percent between March 13. , 2020 and September 30, 2021. Private student loans and federal student loans not owned by the Department of Education are not covered by the CARES Act.
Do I need to take action to make this happen?
No. The zero percent interest rate and suspension of payments (technically called “administrative forbearance”) until the end of September 2021 occurs automatically for all borrowers with student loans held by the Department of Education. you can contact your repairer for a refund.
I am still confused. Which student loans benefit from the zero% interest rate?
The zero percent loan rate applies to federal student loans held by the Department of Education and includes:
- Direct loans (in default and not in default)
- Certain Federal Perkins Loans
- Certain federal loans for family education (in default and not in default)
Federal Family Education Loans (FFEL) were granted prior to 2010. The FFEL program includes Stafford loans, the interest of which is paid by the government while the student is in school or during a grace period, and unsubsidized Stafford loans, the interest of which is not paid by the government.
The zero percent loan rate also includes direct consolidation loans as well as PLUS loans, which allow parents to borrow for the undergraduate and graduate studies of their dependents.
Are there any student loans that don’t get a 0% interest rate?
Yes. Some FFEL loans are owned by commercial lenders and some Perkins loans are owned by the schools themselves. These loans, and any other loan not belonging to the Ministry of Education, are not covered by the CARES Act.
I have no idea who owns my loan. How can I know?
You can find a list of student loan services for loans held by the Ministry of Education online. The servicer is the company to which you send your monthly payment. If you are unsure who your repairer is or how to contact them, contact the Ministry of Education via StudentAid.gov or dial 800-433-3243.
My loans do not belong to the Ministry of Education. Is there anything I can do?
Yes. First, you can ask your manager to lower your interest rate and / or suspend payments for a period of time. You may consider consolidating your FFEL loans held by commercial lenders and your Perkins loans held by your school into a direct consolidation loan, which would be owned by the Department of Education. However, this is an individual decision with potential negative consequences.
A loan consolidation would get you a zero percent interest rate until January 31, 2021, but your balance and interest rate thereafter may be higher than the loans you are currently paying. Consolidating your loan also resets the clock for any potential loan forgiveness. Be sure to ask your agent how your loan balance, interest rate, and total amount payable would change if you bundled up a direct consolidation loan.
What about Income Based Repayment Plans (IDR) and Public Service Loan Remission (PSLF)?
All student loans held by the Department of Education are forborne, which means you won’t have to make payments until January 31, 2021. Your loan manager should contact you in August to remind you when payments are due. must resume. Until then, the break in payments will not count against you. For income-based refunds, missed payments will always count as your forgiveness. For PSLF participants, missed payments will count as if you made them on time as long as you have a direct loan and continue to work for the qualifying employer during the forbearance period.
I am at fault. Am I getting relief?
If you are in default on your federal student loans, your salary, tax refund, and Social Security benefits, including disability benefits, will not be garnished during the forbearance period. In addition, your loans will not accumulate interest during the forbearance period. Again, private loans are not covered by the CARES Act.
I have money. Can I continue to repay my student loans?
Yes. If you want to continue making payments, those payments will count toward your loan principal, lowering your overall interest payments and ultimately paying off the loan faster.