facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
%POST_TITLE% Thumbnail

Coronavirus and Student Loan Debt: What You Need to Know

Student loan reached $1.48 trillion in America by the end of 2019, with approximately 45 million borrowers across the United States.Amidst the COVID-19 pandemic, many Americans have experienced financial instability. This means that for 45 million Americans, paying down student loan debt may be harder than ever before.

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was signed into law on March 27, 2020. While this stimulus package provides a wide array of assistance for families and businesses, it also made some important changes to assist federal student loan borrowers. 

In response to these changes, we’ve provided the answers to a few important questions regarding student loan debt during the current pandemic. 

Question #1: Are Interest & Payments Suspended on All Student Loans?

The suspension of payments applies only to student loans that are held by the federal government. However, your FFEL (Federal Family Education Loan) lender or school may suspend interest and payments voluntarily, but they are not required to do so. 

In regards to your federal student loans, your servicer will suspend all interest and payments through September 30, 2020.2 

The benefits authorized by the CARES Act do not apply to private student loans that are owned by banks, credit unions, schools or other private entities. If you are trying to suspend payments to these institutions, you will need to contact them and find out what your options are. 

Question #2: Should I Apply to Suspend My Payments or Interest?

Until September 30, 2020, there will be no interest accrued or payments due for federal student loans.2 No action is required on your part, as these payments will be stopped automatically.  

Question #3: What Should I Do if I’m Behind on Payments?

On March 25, 2020, the Department of Education announced that it would not be withholding federal tax refunds, Social Security payments or garnishing wages from those who have defaulted on their federal student loan payments.3 Additionally, private collection agencies contracted by the government will put a pause on attempting to contact defaulted borrowers. 

Any defaulted federal student loan will not collect interest until September 30, 2020.3

As you navigate a “new normal” through the COVID-19 pandemic, it’s likely you’re experiencing a certain level of financial stress. Continuing to make regular payments to your federal student loans can be beneficial in the long-run, but it’s important to know your options have changed. If you’re unsure whether to stop payments or not, get in touch with your financial advisor first. Together, you can make a game plan moving forward. 

  1. https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/hhdc_2019q2.pdf
  2. https://www.congress.gov/bill/116th-congress/house-bill/748
  3. https://studentaid.gov/announcements-events/coronavirus#defaulted-loan-questions

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.


The commentary on this website reflects the personal opinions, viewpoints and analyses of the Ascend Investment Partners employees providing such comments, and should not be regarded as a description of advisory services provided by Kesler, Norman & Wride, LLC dba Ascend Investment Partners or performance returns of any Ascend Investment Partners Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Ascend Investment Partners manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.