Trump signed the CARES Act as a response to COVID-19. Because of this, the government temporarily stopped charging interest on some federal student loans and stopped making payments on them until September 30, 2020. Former President Donald Trump extended the student loan benefit until December 31, 2020, and President Joe Biden extended the pause on payments and interest until 2023.
This extension is unique. It was made as a response to the ongoing court battle over the Student Loan Forgiveness Program of the Biden Administration. The Department of Education says that the stop in payments will last for 60 days after the case is over. If the problem is not fixed by June 30, 2023, payments will start again 60 days after that date.
Here’s what to look forward to:
What kinds of loans can get the interest rate waived?
At first, only federal student loans held by the federal government were affected by the interest waiver. As of March 30, 2021, the Department of Education (ED) made the benefit available to private parties who hold defaulted FFELP (also called FFEL) loans.
The government does not pay the interest on private student loans from College Ave or other private lenders.
Does this affect how much I have to pay each month on my federal student loans?
Yes. All payments on Federal Direct loans that are not in default and FFEL loans that the government owns are automatically put on hold until the payment pause is over.
As of March 30, 2021, federal student loans made through the Federal Family Education Loan (FFEL) Program that are currently in default are also eligible for the interest waiver and payment pause. The change will affect loans that were already in default, and default records will be taken off of people’s credit reports. To find out more, go to the Federal Student Aid website and look at the COVID-19 Emergency Relief Help page.
You should keep looking over your monthly student loan statements to see if anything has changed and to make sure you know which loans are covered by the CARES Act.
What do I do if I can’t pay back loans that aren’t held by the Federal Government?
If you are behind on a privately held FFEL loan, you may be able to get the interest waived and your payments put on hold. Check with the person who handles your loan to find out what your options are.
If you can’t pay your bills every month. Don’t avoid the issue. Contact the people who handle your federal and private loans to talk about your options. You might be able to get a deferment or forbearance to put your payments on hold for a while.