You’ve probably heard that the new federal CARES Act has automatically suspended payments and the accumulation of interest on your “student loans held by federal government agencies” from March 13 through September 30.
This means that you need do nothing to have your federally-held postsecondary debt payments and interest put off until October — one way the federal government’s trying to eliminate financial burdens caused by economic upheavals during the coronavirus pandemic. But just what are student loans held by federal government agencies?
This term applies all Federal Direct Loan Program (FDLP) Loans. It also consists of other federal college debt owned by the U.S. government, including:
- Federal Perkins Loan(s) if you defaulted on them or the postsecondary school(s) that made them to you sold them to the government; and
- Federal Family Education Loan Program (FFELP) debts — but, again, only if they were sold to the government since a commercial lender made them to you.
How can you find out if your Perkins and FDLP Loans were sold to the federal government? Contact the loan servicer administering those loans and ask.
And if such loans haven’t been sold to Washington, is there any way for them to get the automatic payment and interest accumulation suspensions available to FDLP Loans? Yes! You can borrow an FDLP Consolidation Loan to pay them off and, in effect, turn what you owe on them into an FDLP debt. It usually takes two – three weeks for FDLP consolidations to be completed. And when it’s completed, Perkins and FFELP interest will be capitalized (added to loan principal), so to minimize the amount of interest that’s capitalized, keep making Perkins and FFELP payments you owe until you’re notified that they’ve been consolidated.
The FDLP doesn’t consolidate private, state, and institutional student loans, but an FDLP Consolidation Loan will ensure that all your federal student debt payments are suspended without any interest accumulating through the end of September. If this’ll help you weather the current coronavirus crisis, start the ball rolling for a new FDLP Consolidation Loan today!
Contact College Affordability Solutions at (512) 366-5354 or firstname.lastname@example.org if you’re trying to figure out how to best manage your student loan debt, federal or otherwise. Let us use our 42 years of student loan expertise to work for you through our no-charge consultations!