Is Your Student Loan Eligible For 0% Interest From The Coronavirus?

The CARES Act was signed into law on March 27, 2020. While you may have heard about its $1,200 stimulus payments and $600 per week unemployment assistance, you may not know how it affects student loans.

To bring you up to speed, here are some frequently asked questions about how the CARES Act impacts certain student loans.

Who Gets Student Loan Relief Under the CARES Act?

Federal student loan borrowers are covered by the CARES Act, which gives them an automatic administrative forbearance.

If you qualify, your monthly student loan payment will be suspended until September 30, 2020. This move was made to help those affected by COVID-19, but you can continue to make payments if you’d like.

Beyond the suspension of payments, qualifying borrowers can also enjoy zero-percent interest on their loans between March 13, 2020, and September 30, 2020.

Which Loans Qualify for Zero Percent Interest and Forbearance?

Federal student loans are covered, as long as the U.S. Department of Education owns them. This includes defaulted/non-defaulted direct, FFEL, and federal Perkins loans, as well as defaulted HEAL loans.

If you have FFEL and HEAL loans that are owned by commercial lenders and not the Department of Education, they do not qualify for relief. The same holds for any Perkins loans that are owned by your university.

Should you fall into these categories, contact your loan servicer to see how they’ve responded to the coronavirus pandemic. You still may be eligible for some type of relief.

Since the Department of Education has no authority over private student loans, they are not eligible for CARES Act relief.

How Can You Tell If the Department of Education Owns Your Loan?

If you have direct or FFEL loans and are wondering if the Department of Education owns them, do the following:

• Go here: https://studentaid.gov/fsa-id/sign-in/landing
• Use your FSA ID to log in.
• Click “View details” on your StudentAid.gov dashboard.
• On your Aid Summary, scroll down to the “Loan Breakdown” section.
• Look for a servicer named “DEPT OF ED,” which means the Department of Education owns your loan.

If you are still unsure of whether or not your loans qualify for CARES Act forbearance and reduced interest, contact your loan servicer. This is the company you pay each month to lower your student loan debt.

If you don’t know who they are, call 1-800-4-FED-AID. A customer service representative should be able to point you in the right direction.

What Must Be Done to Have the Zero Percent Interest Applied to Your Loan?

As long as your student loan qualifies for relief, you don’t have to do anything to enjoy the forbearance and zero percent interest benefits.

The Department of Education will automatically adjust your account. It will be effective March 13, 2020, and during the period, you won’t have to worry about interest accumulating.