When the pandemic hit, the US government put federal loans into automatic forbearance — but it won't last forever
Student loan forbearance ends on September 30, 2020. Federal student loans in the US were automatically placed into a period of forbearance created by the CARES Act, which suspended payments and interest rates. When the forbearance period ends, automatic payments will restart and interest rates will return. Your loan repayment will pick up where you left off. If you're not ready to start making payments on September 30, calling your federal student loan servicer is the first step. Learn more about getting or refinancing a student loan with CommonBond »
In mid March, the CARES Act put every borrower's student loans into forbearance. It temporarily set interest rates at 0%, and stopped all automatic payments. However, student loan payments will resume on September 30, 2020 as the CARES Act provision expires. Accounts that use automatic payments will resume billing. Similarly, remaining balances will resume interest rates, and loans will begin accruing interest again. Student loan repayments will pick up where they left off, with borrowers paying the same amount as they did in March. If you re-started your payments during the pandemic by calling your loan servicer, your automatic payments will continue. Other parts of the federal student loan program will also restart. Wage garnishing for anyone who has defaulted on student loans will resume again on September 30. For people on income-driven repayment plans or public service loan forgiveness, payments will be required once again for each month to count towards loan forgiveness. Private student loan borrowers, as well as borrowers with Perkins loans and Federal Family Education Loans, including Parent PLUS loan borrowers, didn't have a pause on their accounts. For these borrowers, payments were still required in recent months, unless otherwise arranged with your servicer or lender.
If you're not ready to start making payments, call your student loan servicer as soon as possible If you're uncertain of your financial situation, it's time to start making plans to pay or making other arrangements with your student loan servicer. As of now, it's not likely that student loan forbearance will be extended. Calling your student loan servicer is the best way to get in touch with someone about your federal student loan. All federal student loans are assigned to one of 10 companies that collect payments and offer customer service for federal student loans. To find your servicer, log into your Federal Student Aid account or call the Federal Student Aid Information Center at 1-800-433-3243. Like many other bills and debt payments, some lenders are working with customers to temporarily suspend payments. Call your student loan servicer and explain your situation, and find out what options are being offered after the forbearance period ends. Your options may vary based on which servicer you're working with and the state you live in. Starting to plan for payments sooner rather than later will also give you valuable time to save for later payments if you can't suspend your payments after September 30. Pausing other loan payments and bills could also free up cash flow. Keeping up with your student loan, if possible, can help you avoid a damaged credit score, or falling into delinquency. Related Content Module: More on managing money right nowJoin the conversation about this story »
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Most federal student loan borrowers don’t have to make payments until October 2020, without the risk...Most federal student loan borrowers don’t have to make payments until October 2020, without the risk of interest building up on the balance during that time.Read more...