New Federal Student Debt Payments Benefits in Effect Because of COVID-19 Pandemic, Here’s How They Work
May 18, 2020
The following article is from WAFB
Many of us have student loans as we invested in our education years ago. But, if you haven't logged on to look at your student loan activity lately, you might want to now.
Lori Auxier is the Director of Student Success with the Educational Credit Management Corporation. And she said the CARES Act sets up some benefits for student debt repayers.
"The first one and most important one, I think, is there is a zero percent interest rate assigned to all loans owned by the U.S. Department of Education," said Auxier.
That means if you have a federally owned student loan, you are not collecting interest at this time.
"There is nothing a student has to do to claim this interest benefit. It is something that is automatically happening," she said.
This is in effect from March 13 to Sept. 30, 2020. Auxier mentioned another benefit that helps your wallet until late September.
"Students are not required to make a payment during that timeframe," she said.
So, you won't see a bill until October of this year. Again, this applies for loans under the U.S. Department of Education, which can be a direct, federal family education, federal Perkins, or an HEAL loan. If you don't know what kind of loan you have, log into studentaid.gov.
"And they can look at their loan history and determine who their loans are owned by and who they're serviced by," said Auxier.
Now, you can continue to make repayments if you want. But Auxier said that might not be the smartest option if you have an income-driven repayment plan or public service loan forgiveness program.
"Because then they won't be able to maximize their loan forgiveness at the end," she said.
You can reevaluate your payment plans at any time on studentaid.gov.
Auxier said, as we get close to September, her office will be watching the U.S. Department of Education to see if they extend the program. Otherwise, expect a call from your loan servicer around August to remind you repayment plans will resume as they did before the pandemic.
In the meantime, these new student loan repayment rules should help maximize your wallet.