What’s going on with your Student Loans and do you need to be making payments?

The cost of education student loans bankruptcyUPDATE 12/4/20 : The federal student loan administrative forbearance period (the pause in interest accrual, and the suspension of collections activity) has been continued through January 31, 2021 in response to COVID-19 National Emergency.

“The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been impacted,” said Secretary DeVos. “The added time also allows Congress to do its job and determine what measures it believes are necessary and appropriate. The Congress, not the Executive Branch, is in charge of student loan policy.”

The Department continues to update ed.gov/coronavirus with information on COVID-19 for students, parents, educators, and local leaders.

Published August 25, 2020:

After Congress left Washington without a stimulus bill, Trump issued an executive memorandum to extend student loan relief through December 31, 2020. As a result, Secretary of Education Betsy DeVos implemented the following:

  • No federal student loan payments;
  • No interest on your federal student loan payments; AND
  • No garnishment of wages, Social Security and tax refunds for student loan debt collection for those in default.
  • Count non-payments of federal student loan debt toward requirements for public service loan forgiveness
This closely mirrors the student loan relief in the Cares Act and runs through December 31, 2020.

Relief does not apply to private student loans.

Also, relief does not apply to ALL student loans.
They must be owned by the U.S. Department of Education.
Loans that are NOT owned by the federal government include FFELP loans and Perkins loans. If you have these types of loans, you do not have relief and must keep paying them.
FFELP loans are federal student loans that were issued to borrowers before 2010 by private banks and financial institutions, and are therefore not owned by the federal government.
Perkins loans are a type of student loan that are typically owned by colleges and universities.

Even if you are eligible for relief, we strongly suggest that if you have the funds available that you CONTINUE to make your monthly payments (more if possible) towards your student loan.

With student loans at zero percent interest every dollar you pay towards you loan goes to principal, shortening the life of the loan and the total amount repaid.
Borrowers with larger balances benefit the most because they are the ones who pay the most in interest. The median borrower—according a Federal Reserve study —would still be able to reduce their loan balance by nearly $2700 during this year. Borrowers with larger payments (and likely larger balances) would make a larger dent.
Stay safe.