On August 8th, President Trump released an executive memorandum extending the student loan payment relief outlined in the CARES Act until Dec 31, 2020.
Last week, U.S. Secretary of Education Betsy Devos directed Federal Student Aid (FSA) to implement the president’s directive. Borrowers with federally held student loans will …
- not need to make payments until 2021
- receive a 0% interest rate
- monthly nonpayments will still count towards forgiveness
Likewise, no collection attempts will be made. According to a statement released by Secretary Devos, “During this extended time frame for the payment suspension, collections on defaulted, federally held loans are still halted, and any borrower with defaulted federally held loans whose employer continues to garnish their wages will receive a refund of those garnishments.”
We encourage borrowers to continue making payments if they can since the full payment will be applied to the principal of the loan. This can help borrowers pay off their loans sooner and save more money on interest.
Student loan servicers are still updating their websites to reflect the directive and notify borrowers of the relief extension over the coming weeks. If you have any questions regarding your student loan repayment, please connect to an ION advisor today.