The Coronavirus Aid, Relief, and Economic Security (CARES) Act became law on March 27, 2020. It includes broad relief for hardships created by the COVID-19 pandemic, including significant benefits for Americans paying off student loans.
In this post, we’ll cover what the coronavirus relief is, who can use it, and how it impacts the future of your student loan repayment. I’ll also answer the following questions from Money Girl readers and podcast listeners about paying their loans.
Maria B. says:
I have a $240,000 federal consolidated student loan that’s in the 20-year forgiveness program. But I won’t be able to pay off the loan before the 20-year term ends. Now that the loan is in forbearance due to coronavirus, should I opt out and continue paying it down or use the money for something else?
I want to thank you for your helpful podcast and tips. Although this is a tough time, I’m saving more than if I were eating out and purchasing coffees. How do you recommend I handle my federal student loans during this pandemic?
Thanks for your great questions, Maria and Rebecca! I’ll answer them as we review 10 things borrowers should know about coronavirus student loan relief.
Here’s the detail about primary benefits the CARES Act gives most people who are paying off student loans.
1. Most student loan payments are in forbearance
Starting on March 13, 2020, most student loans will be on automatic forbearance until September 30, 2020. That means you can temporarily stop making your monthly student loan payments for about six months.
If you have autopay set up to draft monthly loan payments from your bank account, it should stop and restart without you having to do anything. But keep an eye on your account to make sure you know exactly when your last loan payment occurs.
Most student loans will be on automatic forbearance until September 30, 2020. That means you can temporarily stop making your monthly student loan payments for about six months.
If you make student loan payments manually, set a calendar reminder so you won’t forget about the suspension expiration after September 30. Your loan servicer should contact you no later than in August to remind you when your payment is due. So, make sure your contact information is up to date with your lenders.
2. Student loan forbearance is retroactive
If your student loan payment was already drafted from your bank account or you sent payment for March or April, be aware that the forbearance is retroactive. That means any payments made between March 13 and September 30 can…