Last Updated: March 20, 2020
What has happened?
- On March 13th, President Trump announced the Department of Education will waive the interest on any federally held student loan.
- On March 20th, U.S. Secretary of Education Betsy DeVos announced the details of the COVID-19 National Emergency Student Loan Relief plan.
What we know so far.
- As of March 13th, all federally held student loans will automatically have their interest rate set to 0%. This means, since March 13th, any federally held loan has not been accruing its daily interest. Any outstanding interest from before March 13th will still have to be paid.
- All federal borrowers have the option to suspend their payments for at least 2 months. To do this, you will have to contact your student loan servicer and request your loans to be placed on forbearance. Forbearance freezes your student loan payments, and since interest is not accruing due to the waiver, your balance will not increase.
- Any borrower more than 31 days delinquent as of March 13, 2020, or who becomes more than 31 days delinquent, will automatically have their payments suspended.
Which student loans qualify?
Only student loans that are held by the federal government qualify for these relief programs.
- Federal Direct Loans
- Stafford Loans
It doesn't include:
- Private Loans
- Perkins Loans (Those are held by the college or university you attended)
- FFEL Loans
Don't know if you have a federally held student loan? Visit https://studentaid.gov/ to get a list of all of your federally held student loans.
How will this affect my payments?
Your payments will not change; on the contrary, the waiver will allow for your full monthly payment to go directly to your outstanding principal. This will help you make faster progress paying off your debt!
What should I do if I am having trouble making payments?
For Federal Student Loans:
- Contact your student loan servicer and request to be placed on an administrative forbearance per the National Emergency Student Loan Relief. You will not have to make payments for at least the next 60 days and your balance will not increase since your loans are not accruing interest.
For Private Student Loans:
- Since the Federal Reserve lowered interest rates, it is a great time to see if you qualify to refinance your loans. You can save hundreds of dollars on future interest payments by reducing the rate you currently have.
- Contact your loan servicer. Some servicers have expressed that they will work one-on-one with borrowers to find the best option for them during the COVID-19 National Emergency.
How do I apply for the interest waiver?
No need to apply, all federally held student loans have had their interest rate set to 0% since March 13th.
Will my payments be automatically applied to my principal?
Yes, you will not have to contact your student loan servicer to apply your payments differently. However, you will still need to pay any outstanding interest (from before March 13th) and any outstanding fees (i.e. late fees) before the payment will be applied to your principal.
If I am pursuing PSLF, do I still need to keep making payments?
Yes! It is important for you to keep making on-time payments to be on track to getting your loans forgiven.
Have a question that wasn’t answered?
GradJoy’s fanatical support team is here to help. Don’t hesitate to reach out for any questions regarding your loans, payments or the waiver. You can reach us at [email protected] or by texting us at (512) 714-6940.