President Biden issued a presidential directive intended to help struggling Americans.
In particular, this directive specifically addressed the issue of student debt by extending the administrative forbearance on student loan payments and waiving interest. You can find the current status of the payment pause here.
Here’s what borrowers need to know:
- All borrowers with federally-held student loans will continue to have their payments and interest automatically suspended for the duration of the payment pause without penalty. (Borrowers will still have the option to make payments during this period if they choose.)
- Commercially-held loans from the Federal Family Education Loan (FFEL) Program that are in default also have their payments and interest automatically suspended. (This policy was announced in August 2022. Borrowers who made voluntary payments on any of these loans during the past year will have the option to request a refund of those amounts. The Department will also work with the guaranty agencies, who hold these defaulted FFEL Program loans, to implement the 0% interest rate for these borrowers.)
- Wage garnishments and collections for defaulted federal loans will continue to be paused. (and eligible for refund for any borrowers who continue to experience those garnishments, including borrowers with commercially-held FFEL loans that are in default.)
- Suspended payments will count toward Public Service Loan Forgiveness (PSLF) and Temporary Expanded PSLF(TEPSLF), as long as borrowers meet all other requirements. (The same goes for suspended payments made by borrowers on income-driven repayment (IDR) plans: they will count towards required payments in order to receive forgiveness under that IDR plan.)
- Borrowers already enrolled in IDR plans will not need to recertify their income before payments restart, regardless of if their original recertification date would have occurred before then. The earliest you could be required to recertify is six months after the payment pause ends. Borrowers will be notified by their loan servicers of their new recertification dates 30-60 days before they must recertify.
You can find the official announcement regarding the extension of the CARES Act Forbearance here.
Find the official Department of Education guidance regarding all coronavirus relief efforts here. https://studentaid.gov/announcements-events/coronavirus