How student loan borrowers can benefit from COVID-19 relief

Consumers hit hard by the effects of the COVID-19 pandemic can find some help, thanks to new legislation passed by Congress. Those who can benefit include some student loan borrowers.

The CARES Act suspends payments on federal student loans until Sept. 30.

If you have student loans, here’s what you should know:

1) Not all loans qualify. The suspension mandated in the CARES Act is only for loans held by the U.S. Department of Education. It does not cover FFELP (Federal Family Education Loan Program) loans or Perkins loans held by private lenders, nor does it cover private loans. However, some private lenders might provide these benefits on a voluntary basis. If you’re not sure whether you qualify, contact your loan servicer. If you don’t know who your loan servicer is, you can look it up at Federal Student Aid, studentaid.gov/fsa-id/sign-in/landing.

2) If your loan does qualify, you don’t need to do anything 
Your payments will automatically stop from March 13 through Sept. 30, 2020.

3) Interest is also suspended
No interest will accrue on your loan until Sept. 30, so your outstanding loan balance won’t grow while your payments are suspended.

4) Collection on defaulted loans
If you’re in default, your wages will not be garnished until Sept. 30, 2020.

Note: You can still pay if you want  
If you choose to continue paying off your loans during the suspension, your monthly payments will be the same as before the suspension.

If your loan doesn’t qualify there might be hope down the road. The Iowa Attorney General is urging private lenders and creditors not part of the CARES Act to provide a reprieve for distressed borrowers. Hopefully more news will come from that in the coming weeks.

If you have more questions you can find more information here:  studentaid.gov/announcements-events/coronavirus.