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If you’re among the 43 million borrowers with federal student loan debt, you may be eligible for payment suspension thanks to the CARES Act. Signed into law on March 27, 2020, the Act offers relief for some federal student loan borrowers in five key areas.

1. You aren’t required to make payments on eligible loans for a period of time.

Through September 30, 2020, payments will be suspended for borrowers with federal student loans held by the U.S. Department of Education. Eligible borrowers have been automatically placed in an administrative forbearance for the following types of loans owned by the Education Department:

• Direct Loans
• FFEL Program loans
• Federal Perkins Loans

Most borrowers have Direct Loans that are eligible under the Act. However, it’s important to note that private lenders own some FFEL Program loans. Additionally, many Perkin’s Loans are owned by the institution the borrowers attended.

If you have an FFEL or Perkin’s loan, contact your lender or servicer to see if you are eligible for payment relief. Not all FFEL or Perkin’s loans are covered under the CARE’s Act and, therefore, may not be qualified.

2. You will not be charged interest during this time.

The interest rate on federally owned student loans has been dropped to 0% through September 30, 2020, as a provision of the CARES Act. What’s more, if your payments were set up on auto-payment status and you had a payment debited from your account after March 13, 2020, you may request a refund by contacting the servicer directly.

3. You get credit during the forbearance period if you’re enrolled in a forgiveness program.

Furthermore, if you’re adequately enrolled for a forgiveness program, such as the Public Service Loan Forgiveness (PSLF) program, you can take advantage of the payment pause and still accumulate credit towards the forgiveness program each month during the forbearance term.

4. You’re eligible even if you’re in default, and collection efforts halt temporarily.

No matter if you’re current or not, you will not incur fees or interest during the payment holiday. And for those borrowers in default status (more than 270 days behind in payments), collection efforts will cease temporarily. This includes the garnishment of wages or social security benefits and income tax refund interception. However, collection efforts will resume on October 1, 2020.

5. Your employer may offer to pay up to $5,250 of your student loans through December 31, 2020.

Employers can contribute up to $5,250 towards your student loans. Contributions made by your employer are pre-tax and are allowed through the end of the year. It’s important to note that this is an optional benefit your employer may offer in the workplace. It is not required, and therefore not all employers may offer it.

The provisions offered in the CARES Act for federal student loans may allow you the next few months to improve your finances, get out of default, or get extra money together for an emergency. However, you may choose to opt-out of the automatic forbearance period and continue to make payments. If you have the financial resources to do so, this may be an excellent time to pay down a good chunk of your loan balances since interest will not be accruing.

Now, if your income drops over the next few months and you cannot afford payments on October 1, 2020, you may be eligible for an income-driven repayment plan, a payment deferment, or forbearance plan. Contact your servicer to update your income information, and request an alternative payment plan before your next payment becomes due.

If you’re not sure whether your loan qualifies for financial relief under the provisions of the CARES Act, contact your loan servicer online or by phone to determine your eligibility. Loan servicers include Navient, NelNet, Great Lakes, Granite, Federal Loans, among others. Visit or call 1-800-433-3243 to look up your student loans or to find your servicer.

Finally, if you have a private student loan, contact your lender or servicer to explore payment relief options. Every company is under pressure to help borrowers positively handle crisis-related issues.

As always, please let White River Credit Union know if you have any questions.



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