Introduction
Hi there, readers!
Are you a student facing financial hurdles due to the ongoing pandemic? If so, you’re not alone. The CARES Act, enacted in March 2020, provides critical relief and repayment options for students with federal student loans. This article will delve into the details of these provisions, guiding you through the process and ensuring you maximize the benefits available to you.
Key Provisions of the CARES Act for Student Loans
The CARES Act introduced several key provisions that offer relief to federal student loan borrowers:
Automatic Suspension of Payments
From March 13, 2020, through September 30, 2020, all federal student loan payments were automatically suspended. Interest did not accrue during this period, and any payments made were credited toward principal.
No Negative Credit Reporting
During the suspension period, no negative credit reporting occurred on federal student loans. This meant that missed payments did not impact borrowers’ credit scores.
Expanded Loan Forgiveness for Public Servants
The CARES Act expanded the Public Service Loan Forgiveness (PSLF) program, allowing more borrowers to qualify for loan forgiveness. Under these provisions, borrowers who work full-time for qualifying public service employers for 10 years can have their remaining federal student loan debt forgiven.
Repayment Options Under the CARES Act
Once the suspension period ends on September 30, 2020, federal student loan borrowers will need to resume making payments. Several repayment options are available to borrowers, including:
Forbearance
Forbearance allows borrowers to temporarily pause payments for up to 12 months. Interest will continue to accrue during forbearance, but payments are not due.
Deferment
Deferment is another option for pausing payments, but interest does not accrue during this period. However, eligibility requirements for deferment are stricter than for forbearance.
Income-Driven Repayment Plans
Income-driven repayment plans cap monthly payments at a percentage of the borrower’s income. This option can make payments more affordable for borrowers with limited financial resources.
CARES Act Relief for Private Student Loans
While the CARES Act primarily applies to federal student loans, some relief may also be available for private student loans. Borrowers should contact their private loan lenders to inquire about any payment deferment or suspension options.
Table: CARES Act Student Loan Relief Summary
| Provision | Details |
|---|---|
| Automatic Suspension of Payments | Payments paused from March 13, 2020, to September 30, 2020 |
| No Negative Credit Reporting | Missed payments during suspension did not impact credit scores |
| Expanded PSLF | More borrowers qualify for loan forgiveness after 10 years of public service |
| Forbearance | Pause payments for up to 12 months; interest accrues |
| Deferment | Pause payments with no interest accrual; eligibility requirements stricter |
| Income-Driven Repayment Plans | Monthly payments capped at a percentage of income |
Conclusion
The CARES Act provides much-needed relief for student loan borrowers during the COVID-19 pandemic. By understanding the key provisions and repayment options available, you can navigate this challenging time and ensure you’re taking advantage of the support available to you. We encourage you to explore other articles on our website for more information on student loans, financial aid, and other topics that can help you succeed in your academic and financial pursuits.
FAQ about CARES Act Student Loans
Can I still pause making payments on my student loans due to the CARES Act?
Yes, if your loans are federally backed, you can pause payments until at least January 31, 2023.
What types of student loans are covered by the CARES Act?
Direct Stafford, PLUS, FFEL, and Perkins loans are all covered.
Do I need to do anything to pause my payments?
No, your payments were automatically paused when the CARES Act was passed.
What will happen to the interest on my loans during the payment pause?
Interest will not accrue during the payment pause.
Will my credit score be affected if I pause payments?
No, pausing payments under the CARES Act will not negatively impact your credit score.
Is there a limit to how long I can pause my payments?
You can pause payments until at least January 31, 2023.
Can I still make payments on my loans while they’re paused?
Yes, you can make payments if you wish to.
What happens if I make payments during the payment pause?
Any payments made during the pause will be applied to your principal balance.
How will I know when the payment pause ends?
The US Department of Education will provide notice before the payment pause ends.
Where can I find more information about the CARES Act student loan pause?
Visit the Federal Student Aid website: https://studentaid.gov/announcements-events/coronavirus