What Does the CARES Act Mean for Student Loans?

If you are currently paying federally held student loans, the CARES Act may provide you some relief during the COVID-19 public health crisis, including automatically suspending payments and the institution of 0% interest rates. For complete information about the CARES Act and student loans, go to www.studentaid.gov/coronavirus.

Which Loans Qualify for Relief?

The loans that qualify for relief must be federal loans held by the Department of Education. This means that private loans do not qualify for relief. However, if you are having trouble making payments on your private student loans, you should contact your lender to determine what options are available to you during this time.

There are some federal loans that do not qualify for relief under the CARES Act, specifically Federal Family Education Program (FFELP) loans owned by commercial lenders and Perkins loans that are owned by an educational institution. Prior to 2010, it was common for FFELP and Perkins loans to be issued to students, but these loans were held by lenders other than the Department of Education. The loan held by the commercial lender or the educational institution was guaranteed by the federal government. The Department of Education has since acquired some of these loans, but not all. Unfortunately, congress has not provided relief to those who hold FFELP or Perkins loans that are held by commercial lenders. After 2010, most student loans that were issued by the Department of Education were Direct loans. These loans generally qualify for relief under the CARES Act. To learn more about the difference between these types of federal loans, go to the American Bar Association website.

How Do I Find Out if My Loans Qualify for Relief?

Because there are many loan servicing companies that service federal loans, it can be very confusing to find out whether your loans qualify for relief. There is an easy way to determine whether your student loans are federally held and what types of loans you hold. Create an account or login to www.studentaid.gov, look under “My Aid,” and click on “View Details.” You will then be able to access an entire list of your federally held loans, determine what type of loans you hold, and find out which loan services service them.

What Relief Does the CARES Act Provide?

From March 13, 2020, through Sept. 30, 2020, loans are automatically placed into an administrative forbearance on the following types of federal student loans owned by the Department of Education:

  • Defaulted and nondefaulted Direct Loans
  • Defaulted and nondefaulted qualifying FFELP loan
  • Qualifying federal Perkins Loans

In other words, your monthly loan payments are suspended for a period of six months. Your loan servicer must provide you with information in August 2020 to inform you of when the administrative forbearance ends and when your repayment will begin. Make sure your contact information is up to date in your loan servicer account profile.

From March 13, 2020, through Sept. 30, 2020, the interest rate is 0% on the following types of federal student loans owned by the Department of Education:

  • Defaulted and nondefaulted Direct Loans
  • Defaulted and nondefaulted qualifying FFELP loans
  • Qualifying federal Perkins Loans

If your loans are owned by the Department of Education, you do not need to do anything for the interest on my loans to be set at 0%. Your interest rate will be automatically adjusted so that interest doesn’t accrue.

What About Income Driven Repayment Plans?

The payments that would have been made during the administrative forbearance will count toward IDR forgiveness.

If your income has changed during the COVID-19 pandemic, you can update your information and get a new payment amount based on your current income. To do so, visit StudentAid.gov/idr, click on “Apply Now,” and then start the application by clicking on the button next to “Recalculate my monthly payment.” After the administrative forbearance ends on Sept. 30, 2020, your monthly payments will resume at the new amount.

If you would like to enroll in an IDR plan for the first time, visit StudentAid.gov/idr, click on “Apply Now,” and then start the application.

Additionally, crisishelp.bysavi.com is an excellent resource that will help with IDR plans. Student Debt Crisis is the nation's largest student loan advocacy organization. The advocates at Student Debt Crisis and experts at Savi have come together to create this automatic sign-up tool for people who lose their jobs or have their hours cut due to COVID-19. If your income goes down suddenly, you are eligible to have your student loan payment reduced under the government income-driven repayment programs. This tool can help you find the best income driven repayment program for you, and even enroll you in that program.

How Are My Public Service Loan Forgiveness Payments Affected?

If you have a Direct Loan, were on a qualifying repayment plan prior to the suspension, and work full-time for a qualifying employer during the suspension, then you will receive credit toward PSLF for the period of suspension as though you made on-time monthly payments.

What About My Auto-Debit Payments?

Auto-debit payments are suspended during the administrative forbearance. Any auto-debit payments processed between March 13, 2020, and Sept. 30, 2020, can be refunded to you. Contact your loan servicer to request that your payment be refunded.

If you don’t want an administrative forbearance and want to continue making payments, contact your loan servicer to opt out of the administrative forbearance, and your auto-debit payments will resume.

You also have the option to remain in the administrative forbearance and make manual (i.e., not auto-debit) payments during the administrative forbearance period. Visit your loan servicer’s website to make a payment, or contact your loan servicer for more information.

Additional Support

For more information for students who are currently enrolled in school who have taken out federal loans, those whose loans are in default or in collections, and more, go to www.studentaid.gov/coronavirus.

If you wish to provide support to Western New England Law School students who have been affected by COVID-19, the law school has created a Law Student Emergency Fund, separate from the University’s general student emergency fund, specifically to ensure that law students have the financial resources to focus on their academic priorities and career aspirations. WNE is working with students to address their financial hardships, including the purchase of technology for online learning, travel assistance, and rent and living expenses, among other needs.

Below are some additional sites that you or your school may find useful: