There is good news on federal student loan payments

U.S. Secretary of Education Betsy DeVos today implemented President Trump's memorandum extending relief on federally held student loans till the end of the year and will count towards federal student loan forgiveness and rehabilitation programs.

Trump’s executive order

The CARES Act suspends payments on federally held student loans until September 30, 2020. During this time, collections on defaulted loans were halted, and the non-payments counted toward the 120 payments required by the Public Service Loan Forgiveness (PSLF) program and as payments required for other forgiveness under an income-drive repayment plan.

The executive order Trump signed on August 8th, after Congress left Washington with no new relief bill, directed Secretary DeVos to “provide such deferments to borrowers as necessary to continue the temporary cessation of payments and the waiver of all interest on student loans held by the Department of Education until December 31, 2020.”

But there were doubts about how this would work.

Student Loan Payment Suspension will be fully implemented

According to Forbes, DeVos announced that she has fully implemented Mr. Trump's directive." Interest on eligible federal student loans has also been set to 0% during this time: “and all borrowers with federally held student loans will have their payments automatically suspended until 2021 without penalty. 

Borrowers can choose to continue making payments during this time, enabling borrowers to pay off their loans more quickly and at a lower cost.

Non-payment counts toward forgiveness

The action today makes clear that non-payments will continue to count toward these programs.

Borrowers should see this new extension reflected in their accounts over the next several weeks.

Federal Student Loan Collection 

DeVos also announced that collections on defaulted, federally held loans will continue to be halted. In addition, any borrower with eligible federal student loans whose wages are being garnished will receive a refund of those amounts. 


 

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