On March 20, U.S. Secretary of Education Betsy DeVos announced that borrowers with federally issued student loans will receive temporary relief relative to their payments due to the COVID-19 national emergency. Relief applies only to federal loans, not loans granted by an educational institution or commercial lender.
Borrowers with federally held student loans will have the option to suspend payments for at least two months without accruing additional interest, as interest rates have been set to 0% for at least those 60 days. Borrowers can request this forbearance by contacting their loan servicer online or via telephone. Additionally, an automatic suspension has been granted to borrowers more than 31 days delinquent as of March 13, 2020, or who become more than 31 days delinquent after March 13.
Borrowers who continue to make payments will not see their payment amount decline, but their full payment will be applied to the principal, once interest accrued for the time prior to March 13 is paid. Those seeking Public Service Loan Forgiveness or who have enrolled in a repayment plan should consider continuing payments or at least seeking more information from their loan servicer to ensure they are not violating the terms of their program.
Those who have experienced a decrease in their income for any reason should contact their loan servicer to learn of any opportunities to lower their payments.
For more information, visit these resources from the U.S. Department of Education:
- For the press release regarding student loan payment suspension, visit https://www.ed.gov/news/press-releases/delivering-president-trumps-promise-secretary-devos-suspends-federal-student-loan-payments-waives-interest-during-national-emergency.
- For answers to other student financial aid questions, visit gov/coronavirus or call 1-800-4-FED-AID; TTY 1-800-730-8913.
- For information on resources for schools and school personnel, visit gov/coronavirus.
If you have questions or would like to discuss COVID-19’s effect on you or your business, contact a member of the HBK CPAs & Consultants team.