Families throughout the country have made adjustments in light of the Coronavirus pandemic and the resulting lockdown, and the United States government has made concerted efforts to alleviate the financial strains resulting from lost jobs, disrupted economic networks, and many Americans being forced to remain at home until the situation normalizes.
In late March of 2020, President Trump approved the CARES Act, a financial aid package designed to provide American families with a bit of financial flexibility in light of the current economic turbulence. In addition to a financial stimulus, the CARES Act also includes provisions for federal student loans, including an automatic forbearance extending from March 13, 2020 until September 30, 2020.
Important Facts About the CARES Act and Your Student Loans
In addition to automatic forbearance for the next several months, the CARES Act also includes additional provisions that may be particularly helpful to borrowers in default. The CARES Act stipulates that student loan interest will not accrue during the designated time period, and borrowers in default will not face garnishment of their wages, tax refunds, or Social Security benefits during this period.
The added financial flexibility the CARES Act offers should help offset the financial strain caused by the COVID-19 pandemic. Additionally, these changes will take place automatically for all federal student loan borrowers.
Those who hold private loans should contact their loan offices to determine whether these creditors have enacted any type of relief programs that might be beneficial during the crisis. If you’re unsure of the status of your student loans, Betsy Mayotte, who operates the Institute of Student Loan Advisors, provides actionable advice:
Ask your servicer if you have a federally held federal loan, or … log on to studentaid.gov and look at the loan detail and see if it lists the Department of Education as the lender.
How to Make the Most of Recent Student Loan Changes
Many students are uncertain about their college finances due to family members’ health, exposure to the virus, and compulsion to attend classes online and complete their assignments remotely. Most colleges and universities are allowing students to complete credits by working from home and completing their work through digital portals.
More than one third of all American adults carry student loan debt of some kind, and the recent changes implemented with the CARES Act could help families across the country cope with the financial strain caused by the Coronavirus lockdown. Current students who have concerns about their student loans and eligibility for financial aid should contact their schools’ financial aid offices.
A school’s financial aid office can provide valuable guidance during these uncertain times, especially when it comes to eligibility for student aid after economic changes, such as a parent losing a job or eligibility for work-study grants. Some of these recent adjustments will be more difficult to manage than others, so take full advantage of your school’s student loan office to determine the best next steps to take in the face of the COVID-29 pandemic.