Given recent news of Democratic VP nominee Kamala Harris and revised unemployment benefits and mail-in voting changes for the upcoming election—phew!—federal student-loan holders may have missed some welcome news: They won’t have to pay them until 2021.
On Aug. 8 President Trump issued a memo ordering the Secretary of Education to extend the administrative forbearance of federal student loans through Dec. 31, 2020. That temporary measure, made in late March when the novel coronavirus pandemic was just settling in, was originally set to expire Sept. 30—about a month before Election Day.
“The 2019 novel coronavirus known as SARS-CoV-2, the virus causing outbreaks of the disease COVID‑19, has significantly disrupted the lives of Americans,” the memo reads. While the first measure of student-loan relief helped, “many Americans remain unemployed due to the COVID-19 pandemic, and many more have accepted lower wages and reduced hours while States and localities continue to impose social distancing measures. It is therefore appropriate to extend this policy until such time that the economy has stabilized, schools have re-opened, and the crisis brought on by the COVID-19 pandemic has subsided.”
Forbearance means the interest rates on the loans goes to 0% and payments aren’t required during the period. (If you’re interested in continuing to pay them—after all, you are fiscally responsible—you may.) Loan servicers will automatically place federal loans into forbearance without any additional action, but it’s best to check your account to ensure it happens. (If you’ve set up automatic, recurring payments from your bank account to your federal student-loan lender, those will be suspended, too.)
The most popular servicers for federal student loans are FedLoan Servicing, Great Lakes, Navient, Nelnet, Cornerstone, Granite State, HESC, MOHELA, and OSLA.
It’s worth noting that the latest reprieve applies only to federally held student loans—meaning your private student loans aren’t covered by the temporary forbearance, let alone the extension, and you’ll have to continue paying them.
But that still includes several types of loans, such as “Direct” loans and Parent Plus loans. Federal Family Education Loans, or FFELs, and Perkins loans are eligible only if they’re “federally held”—and most are not. (If you’re not sure, call your servicer or 1-800-4-FED-AID to find out if your loans qualify.)