A provision of the CARES Act will suspend payments and interest on federally held programs for the next six months.
If you have a hefty student loan balance, some relief may be coming your way. When President Donald Trump signed the CARES Act into law on March 27, 2020, he activated a provision that will suspend federal student loan payments for six months. The loan forbearances will be automatic and interest will not accrue on the payments that are suspended. The law only applies to loans held by the U.S. Department of Education, not private loans.
How Does the Program Work?
If you are currently making payments on a student loan, payments will be suspended from March 13, 2020, through September 30, 2020. If you have already made your March payment, you can call the loan servicer and get that payment returned. You do not have to cancel automatic payments through your bank; the servicers are supposed to stop collecting those payments through the suspension period. The law also states that no interest will accrue during the payment suspension.
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Will It Affect My Credit?
The loan suspension payments will not impact your credit. The payment will show up as paid and current on your credit report. If you are part of a loan forgiveness or rehab program, these payments will count towards forgiveness and credited as a qualifying rehab payment. If your loan is currently in collections, all payments and garnishment will be altered until the end of September.
How Do I Know If I Qualify?
Most people have several student loans that have been consolidated into one loan, and it’s difficult to know if the loans are federally backed or not. The best thing to do is to contact the company that accepts your payment to find out if you qualify or not.