By Mary-Lynn Bender, Interim Vice President of Government and Public Relations
The $2.3 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) was signed into law on March 27, 2020. This expansive stimulus package, along with providing loans and support to major industries and direct payments to individuals and families, includes provisions that directly impact health professions students and graduates. Here’s what you need to know about how the law affects your federal student loans and loan repayment.
Temporary Relief for Federal Student Loan Borrowers
The CARES Act requires the U.S. Department of Education (ED) Secretary to defer student loan payments, principal, and interest from March 13, 2020, through September 30, 2020, without penalty to the borrower, for all federally held loans. Federal student loan borrowers are automatically placed in an administrative forbearance during this period.
Borrowers have the option of making either full or partial payments during this forbearance period, if they choose, by contacting their loan servicer or visiting their loan servicer’s website. For consideration, continuing to make payments during forbearance could help you pay down your loan balance more quickly because the payment’s full amount will be applied to principal once all interest accrued prior to March 13, 2020, is paid.
Refunds Available for Loan Payments
Any payments on loans made between March 13, 2020, and September 30, 2020, are eligible for a refund. You can request a refund on your payments by contacting your loan servicer.
0% Interest Period
From March 13, 2020, through September 30, 2020, the interest rate on the following types of federal loans owned by ED will be 0%:
- Defaulted and nondefaulted Direct Loans
- Defaulted and nondefaulted FFEL Program loans
- Federal Perkins Loans
ED will automatically adjust your account so that interest does not accrue on qualifying loan types during this period.
Public Service Loan Forgiveness Credit
While payments are suspended between March 13, 2020, and September 30, 2020, borrowers will receive full credit toward Public Service Loan Forgiveness as if they had made on-time monthly payments if they:
- Have a Direct Loan
- Were on a qualifying repayment plan prior to March 13, 2020
- AND work full-time for a qualifying employer between March 13, 2020, and September 30, 2020
For more information about how the forbearance period affects students and borrowers, please visit ED’s web page for answers to commonly asked questions.