Special COVID-19 Bulletin #12: Key Questions Unanswered by President’s Guidance on Student Loan Relief Extension

This past Saturday, to great fanfare from the White House, President Trump signed some executive memos he said will provide extended economic relief to Americans in the midst of the COVID-19 pandemic. One of these documents related to student loans. The problem is that it’s impossible to know whether you as a borrower will get extended relief and what that relief will be.

The CARES Act Congress passed in March automatically waived interest charges and automatically suspended monthly payments on all student loans you owe to ED. This waiver and suspension lasts from March 13 through September 30. It also required ED to count March 13 through September 30 toward the number of months required for you to qualify for Public Service Loan Forgiveness (PSLF) if you’re a public and private nonprofit employee that would have been obligated to make payments.

Democrats in Congress wanted to extend your waivers and suspensions for another year — through September 30, 2021 — on student loans owned by ED and other parties. But congressional Republicans refused to agree, so Trump’s memo is supposed to substitute for additional changes in federal law. However, the memo directs ED only to waive or modify “the requirements and conditions of economic hardship deferments . . . and provide such deferments to borrowers as necessary to continue the temporary cessation of payments and the waiver of all interest. . . .”

Here’s what’s not clear:

  • Will you get an automatic extension or need to apply for an extension and meet rules set up by ED?

  • Will the months to which your extension applies count toward the number of months you need to qualify for PSLF?
  • Will wage garnishment will resume against you if you defaulted on your ED-owned student loan debt?

What is clear is that, whatever ED does, it will:

  • Last only from October 1 through December 31, 2020 — nine months before what would have been the new end of the extension period Democrats wanted.
  • Apply only to your student loans owed by ED — mostly loans made under the Federal Direct Loan Program.
  • Not apply to your private student loans, or your loans from private lenders under the now-defunct Federal Family Education Loan Program, or loans you got from postsecondary schools under the Federal Perkins Loans that closed down in 2018.

Stay tuned! We’ll post clarifying information on this website if and when it becomes available from ED.

College Affordability Solutions offers 42 years experience to help you understand how to best manage and repay your student loan debt, and we never charge borrowers for our services. To arrange a consultation, contact us at (512) 366-5354 or collegeafford@gmail.com.

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