Student Loan Relief During the COVID-19 Pandemic

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On Friday, March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which supplies reduction to student loan debtors.  Here’s what this implies for you.

  • 0% Student Loan Interest Rate for six months – The rate of interest on all federally held student loans will probably be set to 0% till September 30, 2020. Federally held student loans embrace Federal Direct Loans, Federal Perkins Loans and Federal Family Education Loans (FFEL).
  • 6-month Suspension of student loan funds. Student Loan funds are suspended on all federally held student loans till September 30, 2020.
  • Suspended funds rely in the direction of Loan Forgiveness. These suspended loan funds will rely as a qualifying cost for loan forgiveness on an Income Driven Repayment Plan or for Federal Public Service Loan Forgiveness.  Additionally, suspended funds will probably be counted in the direction of loan rehabilitation.
  • Credit reporting companies will see these funds as usually scheduled funds made by you.
  • Collection on defaulted student loans is suspended. Involuntary collections comparable to wage garnishment, tax refund reductions, and reductions of federal advantages like Social Security advantages would even be suspended till September 30, 2020. 
  • Employers who contribute in the direction of your student loan reimbursement – will have the ability to do that tax free for as much as $5,250.

This leaves another query – Why would you continue to want to make funds when you don’t should?  Since the rate of interest is now set to 0%, any funds you make will go on to principal, permitting you to doubtlessly repay your student loan sooner.

READ:   How To Get Relief For Your Private Student Loans Due To Coronavirus

How will all this work?  You will obtain notification from the Department of Education of the momentary suspension and of your choice to proceed to make funds.  Your Loan Servicer is working carefully with the Department of Education to enact the advantages made attainable by the CARES Act.  The web sites and techniques will probably be up to date as quickly as attainable.  You may additionally verify the Federal Student Aid web site for added info.  Beginning on August 1, 2020, you’ll start in search of notices that the momentary suspension interval is ending, and that cost will resume.

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