On August 8, President Trump issued a memorandum extending the payment freeze and interest waiver from the CARES Act until December 31, 2020 for federally-held student loans. Many of our borrowers have reached out with questions about how this affects their loan situation. Below we answer some of the most common questions we’ve received.
How do I know if my loans are “federally held”? What should I do if they don’t qualify for the payment suspension?
One of the most frequent questions we’ve received is around what loans are eligible for the payment freeze and interest waiver. Similar to loans covered under the CARES Act, this executive order applies to loans that are “federally held.” Federal Direct loans and some FFEL, Perkins, and Parent PLUS loans are issued by the U.S. Department of Education and thus considered to be “federally held.”
To see if your loans qualify, you can login to your Summer account (or create an account here) and click ‘My Federal Loans’ in the left hand menu and sync your loan information. You can also find this information by logging in to Federal Student Aid.
Based on your type of loan, you can then see if your loans are eligible for the payment freeze and interest waiver as well as your options based on your ability to pay these loans.
|What type of loan do you have?||Federal Direct
|FFEL or Perkins Student Loans, Federally-Held||FFEL or Perkins Student Loan, Commercially-Held||Private
|Is your loan covered by the COVID-19 forbearance payment freeze?||Yes. Payments and interest are paused through December 31, 2020||Yes. Payments and interest are paused through December 31, 2020||No. Loan servicers are still collecting payments.||No. Loan servicers are still collecting payments.|
|What should you do if you’re struggling to make payments?||Payments are automatically paused through December 31st||Payments are automatically paused through December 31st||Consider enrolling in an Income-Driven Repayment Plan to lower your monthly payments||Contact your loan servicer to ask for relief options|
|What should you do if you want to make payments?||Contact your loan servicer if you would like to resume making payments||Contact your loan servicer if you would like to resume making payments||Continue making payments||Continue making payments|
How will I know if my loan servicer has implemented these changes?
This forbearance should be automatically implemented by your servicer and you will not need to take any action if you’re not planning to resume making payments. However, it’s important to contact your servicer as soon as possible if something looks off. Dealing with student loan servicers is often a case of the squeaky wheel getting the grease. If something looks wrong, say something. If you talk to someone unhelpful, call again the next day. Send your request via multiple channels, like phone, email, or social media. Always be sure to get resolutions in writing in case you need to have them for the future.
Will these suspended payments still count as qualifying payments towards Public Service Loan Forgiveness or income-driven repayment?
The answer is yes! The Department of Education has confirmed that the three month extension from October 1 to December 31 will count toward programs like income-driven repayment (IDR) and Public Service Loan Forgiveness. (This is only if a borrower already meets the other requirements for the program).
Will the other CARES Act provisions be extended?
The Department of Education has also confirmed that other provisions in the CARES Act, such as a halt on involuntary collections for borrowers in default, will be extended through December 31st.
We will continue to update this as more we get more clarity on how these orders will be implemented. If you have additional questions on how the recent memorandum impacts your student loans, send us a note at [email protected]