top of page
  • Writer's pictureTaylor Perry

FAQs | COVID-19 Student Loan Relief

Updated: Dec 4, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27th, 2020. In addition to stimulus payments to American families and individuals, expansion of unemployment benefits, and several other components, the legislative package provides financial relief for federal student loan borrowers in the form of an automatic suspension of payments and interest on federally-held student loans through September 30th, 2020.

How does the CARES Act affect my student loans?

From March 13th through September 30th, 2020, payments on federally-owned student loans are automatically suspended, and interest rates on these loans are set to 0%. The automatic suspension applies to the following types of federal student loans, as long as they are owned by the U.S. Department of Education:

  • Defaulted and non-defaulted Direct Loans

  • Defaulted and non-defaulted Federal Family Education (FFEL) Program Loans*

  • Federal Perkins Loans*

*Some FFEL Program loans and Perkins Loans are not federally-owned. Loans owned by entities other than the U.S. Department of Education are not eligible for payment and interest suspensions.

Some of my federal student loans are not held by the U.S. Department of Education. Are these loans included in the automatic payment suspension and interest waiver?

The automatic suspension of payment and interest applies only to student loans owned by the federal government. If you have a commercially-owned FFEL Program loan or a Perkins loan owned by the educational institution you attend, the automatic payment and interest suspension does not apply.

To find out if your student loans are eligible for the suspension, contact your loan servicer. If you are unsure of how to contact your loan servicer, visit or call 1-800-4-FED-AID.

Do I need to take any action to suspend my federal student loan payments?

No. Your federal student loan servicer will automatically suspend all interests and payments through September 30th, 2020. You are not required to contact your loan servicer or take any other additional action.

I am enrolled in a Public Service Loan Forgiveness (PSLF) program. How will the suspension of payments affect my progress?

If you are enrolled in a PSLF program, your suspended loan payments will still count toward your loan forgiveness as though you had made the payments as usual. As long as you continue to meet all other PSLF program requirements, your loan forgiveness timeline should stay on track.

My federal student loans are in default; how does the CARES Act affect me?

The automatic interest and payment suspension enacted by the CARES Act applies to all federally-held student loans, including defaulted Direct Loans. This means that your defaulted loans will not accrue interest until after September 30th, 2020.

In addition to the interest waiver, the Department of Education has temporarily suspended collections activities on defaulted federal loans. Suspended activities include wage garnishment, withholding of funds from defaulted borrowers’ federal income tax refunds or Social Security benefits, and all proactive collection activities by private collections agencies, including phone calls, collections notices, and billing statements.

Are my private student loan payments and interest also suspended?

No. Student loans owned by banks, credit unions, educational institutions, or any other private entity are not eligible for the automatic suspension provided by the CARES Act. However, your commercial lender or school may choose to offer a voluntary forbearance. Contact your private lender or loan servicer for information on the options available to help you stay on track with your loan payments.

I am in a stable financial position. Can I continue making payments if I am able?

If you would prefer to continue making your regular payments or partial payments on your federally-owned student loans, contact your loan servicer. If you opt-out of the automatic payment suspension, you will not be penalized for partial payments made during the administrative forbearance period (March 13th to September 30th, 2020).

Given the fluid nature of current events, we will be regularly updating our website with relevant information regarding COVID-19 relief efforts and their implications for our firm and our community. Learn more about how COVID-19 will impact your financial situation at our webpage dedicated to COVID-19 updates.

Please subscribe to our blog below to stay up-to-date with the latest information on COVID-19, tax tips, financial planning advice, and more.


Never miss a post!

Subscribe to our blog for the latest tax tips, financial advice, and more.

Thanks for subscribing!

Recent Posts

bottom of page