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Covid-19 Student Loan Relief

PA Student Loan Relief and the CARES ACT

A lot has been up in the air with government relief due to the Corona virus. I’ve been trying to keep track of it, but every day it is changing. The CARES Act was recently passed to address many of these financial issues, one of which is student debt relief. Below is a statement from Peter DeFazio that was emailed out highlighting the student loan relief.

Student Loan Relief

The CARES Act provides multiple benefits for your student loans in order to help borrowers impacted by the COVID-19 outbreak. This includes:

  • Deferring payment of your federal student loans during the public health crisis;
  • Waiving the accrual of interest on your federal student loans; and
  • Halting the garnishing of wages, Social Security benefits, and tax refunds for student loan debt collection.

All loans owned by the U.S. Department of Education (ED) are eligible for these benefits through September 30, 2020. That includes Direct Loans, as well as Federal Perkins Loans and Federal Family Education Loan (FFEL) Program loans held by ED. The Department of Education will remind borrowers in August that payment will resume at September’s end.

Please note that some FFEL Program loans are owned by commercial lenders, and some Perkins Loans are held by the institution you attended. These loans are not eligible for this benefit at this time.

If you are pursuing Public Service Loan Forgivess (PSLF), you may already know that you can’t make a qualifying payment for PSLF while your federal student loans are in forbearance. However, the CARES Act makes sure that any federal student loan payments that you skip between now and September 30, 2020, will still count toward the required 120 qualifying payments.

If you can afford to make your loan payments during the COVID-19 national emergency, you may want to continue to do so to pay off as much of your loan as possible while there is a 0 percent interest rate.

I still have additional questions.
Visit the Federal Student Aid website regarding coronavirus and forbearance info for students, borrowers, and parents.”

– Peter DeFazio

If you’ve been laid off or furloughed and don’t have an income currently, deferring your loan payments can be a way to have extra income during this difficult time. However, if you still have a pay check it is way to make interest free payments to your loans, which will help reduce your principal.

The relief is for federal student loans only. If you have private student loans or are thinking about refinancing your loans, the student loan relief from the CARES Act would not apply to those loans.

You can’t beat 0% interest, but that interest rate is not going to be forever. Currently, interest rates will return to their normal amounts after six months and it might be time to look at refinancing your student loans. If you currently have private student loans it is something you should strongly consider as interest rates have been very low. If you have federal student loans it might be something to consider, depending on how low of an interest rate you can get.

The good news is that there is some relief for those who have federal student loans. If you’re still working you’ll be able to make payments to help lower your principal. Depending on what interest rate you could obtain and what types of loans you have, you might want to consider refinancing.

Are you taking advantage of the student loan relief? Please comment below the original post, sign up to receive future posts by email and share with your friends!