student loan relief covid-19

Are You Eligible for Student Loan Relief Under The CARES Act?

After mortgages, student loans are the second largest category of consumer debt in the United States. 

As COVID-19 continues to force  businesses to pause their operations, tens of million of people have filed claims for unemployment benefits since mid-March 2020. For many, this means not having the funds to handle monthly expenses, including student loan payments. 

However, Congress passed the CARES Act, which includes a provision that decreases student loan interest to zero-percent, and allows individuals to suspend payments without penalty until September 30, 2020. 

The provision also halts the collection of defaulted student loan payments through the garnishment of wages, or through decreasing tax refunds and social security payments. 

Who can take advantage of these student loan relief benefits? Take a look below. 

Who Is eligible for student loan relief under the CARES Act 

The student loan relief provision of the CARES Act only requires that individuals have a student loan serviced by the federal government. These loans include anything under the William D. Ford Federal Direct Loan (Direct Loan) Program, including: 

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans
  • Direct Consolidation Loans
  • Some Perkins and Federal Family Education Loans (if they are serviced by the federal government)

If you have a federal loan in any of these categories, then your loan payments and interest should have been automatically suspended under the CARES Act. You likely — or should have— received a letter or email from your student loan servicer confirming this. 

Since the current average student loan payment is $383 per month, a suspension in payments by the federal government allows you to receive a temporary increase in cash flow, and a chance to increase your savings. 

Unfortunately, there are currently not any provisions in the CARES Act for those who have private student loans. Nevertheless, some private lenders are allowing borrowers to also suspend payments or receive loan forebearances.

Your private lender may also suspend late fees, so be sure to get in touch with your private student loan lender as they may provide some immediate financial assistance

Public Service Loan Forgiveness (PSLF) Eligibility 

Many have wondered if the suspension of payments would impact PSLF eligibility. Fortunately, all those eligible for PSLF can still receive forgiveness, even if they do not make payments during this time. Each suspended payment will still count as one of the qualifying 120 monthly payments if you are working for an eligible employer. 

How to Capitalize on This Opportunity 

Whether you are eligible for suspended loan payments through the federal government, or can arrange a forbearance or deferment with your private lender, you can use this situation to improve your personal finances

In the short-term, you can take money that would have been meant for student loan payments and, instead, focus on more urgent expenses such as food, utilities, or other emergency costs. 

However, for those in a situation where interest is suspended, you can save money in the long-term if you make payments towards your student loan balance during this time—if you haven’t lost your income—as all payments will go toward the principal. 

For more information on the student loan relief provisions of the CARES Act, visit Federal Student Aid. Also, continue to check AskTheMoneyCoach for more eligibility breakdowns of the CARES Act and COVID-19 related resources


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