Collectively, 44-million Americans hold a cumulative $1.5 trillion in student loan debt. With the average monthly payment being $383, and the adverse financial impacts currently imposed by COVID-19, Congress stepped in to offer relief to those struggling to manage this expense during these unprecedented times. 

The CARES Act, a bill intended to offset the negative economic impact of COVID-19, includes provisions to help those with student loans serviced by the federal government. 

What provisions are in the bill, and how can you take advantage of them? We answer your most critical questions below. 

What are the Student Loan Relief Provisions for Student Loan Borrowers in the CARES Act? 

The CARES Act suspended student loan payments and student loan interest accumulation to zero percent through September 30, 2020. The bill has also prevented the federal government from garnishing wages and diminishing tax refunds or social security benefits for those who have defaulted on their student loan payments. 

Who is Eligible for this Student Loan Relief Program? 

We have touched on eligibility requirements in our student loan eligibility article, so feel free to take a look at that for additional details (link). Nevertheless, for student loan borrowers to be eligible, their loan must be serviced by the federal government. These loans include all Direct Loans and some Perkins and Federal Family Education Loans (FFEL). If you are eligible, you should have received a notification from your loan servicer informing you that payments and interest have been suspended from March 13 (retroactively) until September 30, 2020. 

Do I Need to Do Anything to Have Access to These Benefits? 

No, if the federal government services your loans, then you do not need to take any extra measures to take advantage of these benefits. Your loan payments and all interest accumulation are automatically halted until September 30, 2020. 

However, if your federal student loan payments were on autopay, and you want to suspend making payments, then you should cancel these automatic deductions via your bank.

Were There Any Provisions for Private Student Loan Carriers? 

At this time, the student loan relief plan outlined in the CARES Act does not include those who have private loans. However, some private lenders are waiving fees and offering forbearance and deferment options. So, be sure to call your loan servicer to see if you can receive immediate financial assistance. Also, your state may have set up some forbearance and deferment agreements with private student loan lenders (like in California and Illinois), so be sure to check your state government’s website for details.

As of this writing, private student loan companies have reached agreements with 10 states to provide financial relief to private student loan borrowers. The ten states are California, Connecticut, Colorado, Illinois, Massachusetts, New Jersey, New York, Vermont, Virginia, and Washington.

Can I Still Make Payments on My Federally-Serviced Loans During this Time?

Yes! In fact, we here at AskTheMoneyCoach recommend this if you have the means to do so. Since the current interest rate is placed at zero, all payments will go directly to the principal of your loan. However, if you were to make payments during the forbearance period (March 13 to September 30, 2020), and were not aware of the relief plan or need a refund, you can contact your loan servicer to be repaid. 

Am I Still Eligible for Public Service Loan Forgiveness (PSLF) If I Do Not Make Payments? 

If you have a Direct Loan, are signed up for a qualified repayment plan (making 120 qualifying payments), and are working for an eligible employer, then the suspended payments will not place you in breach of your PSLF agreement. You will still receive credit as if you continued to make payments. However, if you have lost employment with an eligible employer, the payments that would have been made during this time would not count. Nevertheless, the 120 PSLF payments do not have to be consecutive, so when you are re-hired by an eligible employer, you can again work toward loan forgiveness. 

Do Defaulted Loans Accrue Interest During this Time? 

If the federal government services your loans, then the answer is no. 

Know What You Can Access 

The more informed you are during this time, the more empowered you can be to manage your finances and ensure you receive the help you need. In addition to the points above, it is also worth noting that: 

• If the federal government has garnished your wages between March 13 and September 30,2020 in error, you can call your student loan servicer to receive a refund. 
• If you have privately-serviced student loans that are in default, collection agencies have been advised not to make collection calls or accept auto-payments. Again, if you cannot make payments, be sure to call your  lender or loan servicing company  to see if they can arrange a forbearance or deferment plan with you. 
• Remember that you can always switch to an income-based repayment plan once the federal student loan provisions are lifted if you find you are making less income. 

For more information about federal student loan relief, be sure to visit the Federal Student Aid website. Also, continue to check back here for eligibility and FAQ information regarding the CARES Act and COVID-19-related personal finance resources.