The CARES Act has ended, and standard repayment rules apply for student loan borrowers.
The Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, was an economic stimulus bill passed by the federal government on March 27, 2020. The bill provided many benefits directly to the American public, and specifically includes relief for Americans struggling with student loan debt. This Act ended September 30, 2023.
Below is a summary of the benefits of the Act and subsequent administrative action toward student loans:
- The CARES Act temporarily suspended interest and payments on all student loans;
- Suspended payments counted toward loan forgiveness programs such as Public Service Loan Forgiveness (PSLF), and counted toward loan rehabilitation;
- Suspended payments were reported as regularly scheduled payments to consumer reporting agencies;
- Suspended collection efforts on defaulted loans, including wage garnishment, reduction of tax refund, and Social Security garnishment;
- Waived consecutive years requirement for Teacher Loan Forgiveness;
- Created new tax benefits for employers to provide student loan payments for an employee. The COVID relief and government funding law passed and signed into law in December of 2020 extended this benefit through the end of 2025, allowing employers to contribute up to $5,250 annually toward student loans tax-free.
- Required the Secretary of Education to inform borrowers of the policy changes no later than 15 days after enactment, and beginning on August 1, 2020 required the Secretary to provide no less than 6 notices of when payment suspension concludes and options to enroll in income-driven repayment plans.
Additionally, here are some important facts to remember:
- Enrollment in CARES Act benefits was automatic and you DID NOT need to opt-in.
- Not all federal student loans qualified for automatic loan suspension.
- Private student loans were not eligible for CARES Act benefits.
- The CARES Act benefits were for a temporary period.
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Continuing to pay on your student loans during this period could have put you ahead.
**For Full Department of Education guidance regarding the CARES Act, visit https://studentaid.gov/announcements-events/covid-19