What Does The End Of Suspended Loan Payments Mean?

In March of 2020, the Coronavirus Aid, Relief, and Economic Security Act also known as the (CARES Act) was passed dictating temporary federal student loan relief. The CARES Act initially suspended loan payments, made interest rates drop to 0% and stopped the collections on defaulted loans until September of 2020. Luckily, the loan relief was extended until the end of December and then extended again until January 31^st, 2021. On August 6th, 2021 the loan relief was extended again until January 31st, 2022. On December 22nd, 2021 it was extended again to May 1st, 2022!

New Flash! The student loan relief was extended again until after May 1st, 2022!

Did the CARES Act include all student loans?

The CARES Act did not include public loans, it only covered federal student loans (including default status loans). The interest rate on all loans was lowered to 0% meaning there was NO interest accrued during the past 10 months. The student loan relief also suspended the payments on active loans and loans in default status.

What happens if you continued payments while the loan payments were suspended?

If you did continue to make payments during this time, all of the payment went directly towards the principle outstanding with the loan. That means those payments significantly cut down the amount of money you would end up paying over the life of the loan. If your circumstances have changed, any payments you made during the suspension period can be refunded back to you.

Will the suspended payments count toward Public Service Loan Forgiveness monthly credits?

The short answer is yes. The loan(s) would still need to be set up as a Direct Loan and you would have needed to maintain full time work with a qualifying employer. If you were not employed or working full time during a portion of the 10-month period, those months would not count towards the 120-month requirement.

What to expect when the loan payments resume…

Studentaid.gov states no payment will be due before the 1st of May 2022. If you have automatic payments set up, they should automatically resume once the suspension has been lifted. If you are unsure how you are going to be able to resume payments on your loans, I would recommend checking out the loan stimulator on the federal student aid website https://studentaid.gov/loan-simulator/. It breaks down what options might be available to you and it can help estimate your payment amounts.

Another option to look at are income-based repayment options. These are income-driven plans, personalized to your individual income and the size of your household. You must submit an application before you will be approved, https://studentaid.gov/app/ibrInstructions.action.

While the suspension be extended again?

Yes! The suspension was just extended again on December 2nd, 2021 until after May 1st, 2022. It is unknown at this time if another extension will be granted past May.