COVID-19 Relief for Student Loan Borrowers
The recently issued Coronavirus Aid, Relief, and Economic Security (CARES) Act provides relief for most student borrowers (Section 3513 of the Act). Effective March 13, 2020 and through September 30, 2020, all interest on qualified student loans is waived and payments are suspended for six months.
1. Eligible Loans:
Most federal loans are eligible for relief. These covered loans include
Subsidized and Unsubsidized Direct Stafford loans
Direct Plus loans for parents and students
Federal Family Education loans owned by the U.S. Department of Education.
Private loans and loans issued by state lending authorities do not qualify.
2. Interest Reduction:
The interest rate on qualified federal loans is reduced to 0% through September 30, 2020
The change will apply to any loan status (in school, in repayment, in default, etc.)
3. Temporary Payments Suspension:
All borrowers are placed on an administrative forbearance from March 13, 2020, through September 30, 2020
Auto-debit payments are suspended through September 30, 2020. Any payments made during this period can be refunded
Borrowers still have the option to make manual payments
About the Author - Dan Kats, Audit Manager, CLFP, recently joined ECS Financial Services, Inc. Dan has more than 11 years of public accounting experience with commercial, not-for-profit, and governmental entities providing audit and consulting services, such as financial statement audits and financial statement reviews. He has worked with a variety of entities, including equipment leasing and financing services companies, construction and real estate entities, universities, colleges, foundations, not-for-profit organizations, associations, retail, and professional services organizations, state agencies, and municipalities.