The new $2.2 trillion CARES Act recently signed into law, includes provisions for student loan forbearance. This is good news for students and parents who were struggling to figure out how to make payments amid mass layoffs due to COVID-19. The provisions contained in the bill allow loan borrowers to put off repaying their student loans for up to six months.
The Act gives families a reprieve for the period March 13, to September 30, 2020. According to the US Department of Education, “federal student loan borrowers are automatically being placed in an administrative forbearance, which allows you to temporarily stop making your monthly loan payment.”
Here are some other key things you should know:
How long will the student loan forbearance last?
At this time, the student loan forbearance only covers the period March 13, 2020 to September 30, 2020. However, it is possible this repayment relief could be extended beyond that time. Congress is currently working on a number of follow-up COVID relief packages.
Although the CARES Act was signed into law on March 27, 2020, it is retroactive to March 13. The US Department of Education is allowing borrowers who made any payments after March 13 to request a refund. During this period, interest on any outstanding federal loans will not accrue.
Who Do You Need To Contact To Get Student Loan Forbearance
You do not have to do anything if your loan is owned (and serviced) by the US Department of Education. If not, you must contact your loan servicer directly to initiate the forbearance.
To find your loan services, contact the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243. You could also visit My Federal Student Aid and log in to find this information.
Types of Loans Eligible For Forbearance
The forbearance, which is automatic, only applies to federal loans, according to the US Department of Education.
Borrowers of private student loans have to contact the institution and make a request to defer their payments. Many institutions are offering some relief to loan borrowers on a case-by-case basis.
Some states are also working to bring relief to student loan borrowers during this economic downturn. New York State Department of Financial Services, for example, recently secured debt relief for up to 300,000 private student loan borrowers. To take advantage of this program, borrowers have to reach out to their loan servicer.
Do You Have to Use the Student Loan Forbearance?
The simple answer is no. You are still allowed to make loan payments although the CARES Act allows for a forbearance. If you can afford to continue making your loan payments, you probably should. Doing so will help you get rid of your student debt sooner rather than later.
Student Loans In Default
If you have a student loan in default, you might have already been subjected to wage garnishment or your income tax refund being withheld. However, during this period covered by the CARES Act (March 13 – September 30, 2020) your wages will not be garnished. And, your tax refund will not be withheld if you file your income tax returns during this period. The Department of Education has ordered all private collection companies to temporarily halt collection procedures.
You should contact the Education Department’s Resolution Group at 1-800-621-3115 if you are interested in consolidating your student loans or a loan rehabilitation program.
To find your federal student loan servicer, please call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243 or visit My Federal Student Aid and log in to find this information.