Are you one of the millions of people who lost their jobs and saw their income destroyed due to COVID-19? If so, this has probably caused loads of concern when it comes to money and paying your bills. And if you have student loan debt, you may be wondering how you’ll ever pay it off right now.
Luckily, the government has stepped in to give some student loan borrowers relief, at least temporarily, with the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
We’ll discuss what type of loans are eligible for relief, the benefits involved, and what you can do if you’re not covered and are worried about ruining your credit.
Student Loan Relief From the CARES Act
The CARES Act became official on March 27. It was put together to offer financial relief to those negatively impacted by the coronavirus and all of its shutdowns. While you may know about the CARES Act mostly due to its hefty $600 per week unemployment benefits and $1,200 stimulus checks, it also addressed the issue of student loan debt.
Learning that the CARES Act covers student loans is excellent news, but it comes with a pretty big asterisk. Unfortunately, all student loans are not included. Only those held by the government are eligible for relief, and they must be provided or guaranteed through the U.S. Department of Education.
CARES Act Benefits for Qualifying Student Loans
There are two significant benefits that the CARES Act provides for holders of federal student loans. The first is that no payments will be necessary between March 13, 2020, and September 30, 2020. The second is that there will be zero interest during this period as well.
Student Loans That Qualify for CARES Act relief
As mentioned, a student loan will have to be provided or guaranteed through the Department of Education. This covers direct loans, Federal Family Education Loans (FFEL), and Perkins loans.
Once you have confirmed that your loan meets those requirements, you do not have to take any action to enjoy the zero-interest loan deferral benefits. Your loan provider will handle the payment suspension automatically.
It’s crucial that you confirm your status before holding off on payments. In the case that your loan does not qualify, avoiding payments could negatively affect your credit or result in penalties and extra fees.
To see if your loan qualifies for CARES Act relief, contact your provider.
Options for Borrowers Not Covered Under the CARES Act
Even if you do not have a loan from the Department of Education, you still may be eligible for relief due to COVID-19. Student loan providers know that since so many have lost their jobs and income, making payments could be close to impossible at the moment.
By contacting your provider, you can see the options that are available, such as postponed payments or lower payments that can offer some wiggle room until you get back on your feet.