Summary: Borrowers with federal student loans will be able to suspend their payments for two months without interest accruing.
As a result of the COVID-19 national emergency, student loan borrowers will be able to pause their federal loan payments for at least two months without accruing interest, the Department of Education said Friday.
President Donald Trump announced Friday during a White House press conference that America’s more than 42 million federal student loan borrowers may take a rest from their monthly payments for at least the next 60 days. Additionally, borrowers will have their interest rate set to 0%, effectively waiving interest during this period.
The decision is an effort to help those financially affected by the coronavirus pandemic.
“These are anxious times, particularly for students and families whose educations, careers, and lives have been disrupted,” said Secretary of Education Betsy DeVos in a news release. “Right now, everyone should be focused on staying safe and healthy, not worrying about their student loan balance growing. I commend President Trump for his quick action on this issue, and I hope it provides meaningful help and peace of mind to those in need.”
Secretary DeVos has directed all federal student loan servicers to grant an administrative forbearance to any borrower with a federally held loan who requests one. The forbearance will be in effect for two months, beginning on March 13, 2020.
Borrowers should contact their loan servicers, such as Nelnet, FedLoan Servicing Navient, or Great Lakes, online or by phone to request the forbearance.
The student loan aid only applies to federal student loans administered by the U.S. Department of Education and its contracted loan servicers. It does not include private student loans, nor federal student loans held by guarantors or colleges.
Borrowers who are seeking Public Service Loan Forgiveness (PSLF) or those enrolled in a repayment plan with a manageable monthly payment who still want to make their monthly payments, can do so. In that case, the payment would be applied directly to the principal balance, and borrowers will be able to pay off their loans more quickly.
Those who are already a month behind on their monthly payments, DOE will automatically apply the 60-day suspension. According to the Education Department’s most recent quarterly data, approximately 3.2 million federally-held student loans are more than month delinquent and another 7.7 million are in default.
President Trump teased more announcements on student loans from his administration.
“We have more to come on student loans, more good news for the students but we’ll do that at a different time,” Trump said.
He also said the state testing waivers might be greeted by some K-12 students.
“Probably a lot of students will be extremely happy, some probably not,” Trump said. “The ones that work hard, maybe not, but it’s one of those things. Very unfortunate circumstances.”
Some Senate Democrats have proposed canceling student loan payments for the duration of the Covid-19 national emergency, which would be different than suspending them. Under the Democratic plan- backed by Sen. Elizabeth Warren of Massachusetts, Senate Minority Leader Chuck Schumer of New York, Washington state’s Sen. Patty Murray and Sen. Sherrod Brown of Ohio-the government would be paying the student loan bills on behalf of the borrowers.
Visit the US Department of Education’s website for more information about managing your student loans during the coronavirus national emergency.