The $2 trillion stimulus package passed by Congress and President Donald Trump on Friday to help the economy during the coronavirus pandemic includes several provisions for federal student loans, including suspending payments through Sept. 30, 2020. During that time, you will not accrue interest on the federal student loans, as the interest rate is set at 0 percent. Nonpayments during the period will also not negatively affect a your credit scores.
The student loan provisions in the CARES Act will go into effect immediately, a House Education and Labor Committee staffer told BuzzFeed. However, they do not effect borrowers with Perkins and commercially-held Federal Family Education Loans. Higher Education found that about 1.2 million borrowers do not qualify, but some advocacy groups believe that number could be even higher. Still, most of the $1.64 trillion in student debt Americans have is in federal loans. College Board estimates that about 12 percent of all education loans for the 2018-19 school year were private loans.
The CARES Act's text notes "each month for which a loan payment was suspended" will be treated as though the borrower did make a payment. Lenders have 15 days to tell borrowers that federal student loan payments were suspended. On Aug. 1, lenders also have to tell borrowers when student loans will begin again in at least six different notices.
If you feel you can continue to pay your student loans during the coronavirus pandemic, you can, notes Forbes. Your student loan payment will not be lower, but the payment will all go to your outstanding loan balance, instead of partly going to interest. Existing federal loan interest is not being waived though and no one is paying the student loans during this period.
The House proposed going further to help student debt relief during the economic downturn caused by the pandemic. However, lawmakers decided to pass the Senate version of the CARES Act to quickly implement relief as soon as possible. The House bill would have required the Department of Education to continue paying the loans for students, for up to $10,000 per loan during the emergency, reports BuzzFeed. This was not passed by Congress, but the House could bring it up again.
Trump signed the CARES Act into law on Friday. The law includes a one-time payment of up to $1,200 to Americans, which lawmakers said will be received within three weeks, reports CNBC.
Businesses across the country have been forced to close during the pandemic as officials try to slow the spread of the coronavirus. On Thursday, the Department of Labor reported 3.28 million Americans filed for unemployment benefits, the single highest number since they began tracking data in 1967.
There are now more than 640,000 coronavirus cases worldwide, including 115,000 in the U.S. Mote than 1,800 people have died, according to Johns Hopkins University data.
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