COVID-19 Student Loans

Authored By: Alaska Legal Services

How does COVID-19 affect my student loans?

How does the Coronavirus Aid, Relief, and Economic Security Act of March 2020 (CARES Act) impact my student loan payments? 

The CARES Act suspends all payments due on non-defaulted Direct Loans and Federal Family Education Loans (FFEL loans) currently owned by the Department of Education, until September 30, 2020. It is unclear when this suspension of payments will begin. The CARES Act does not apply to privately owned student loans, Perkins Loans, or commercially-held FFEL loans. 

For more information visit the Student Loan Borrower Assistance's webpage

What happens to the interest on my student loan during the CARES Act payment suspension?
The CARES Act states that interest shall not accrue while the loan payments are suspended. This only applies to loans that have been suspended, that means Direct Loans and FFEL loans currently owned by the Department. Interest will continue to accrue on all other types of student loans.

For more information visit the Student Loan Borrower Assistance's webpage

How will the CARES Act payment suspension impact Loan Forgiveness or Loan Rehabilitation?

The CARES Act treats each month a payment was suspended as if the borrower made a payment for the purpose of any loan forgiveness or rehabilitation program. 

Borrowers working toward Public Service Loan Forgiveness will also have time in suspension counted toward their 10 years of qualifying payments. However, it is unclear how Public Serice Loan Forgiveness applications will be impacted if you are unable to work or have had your hours cut below full-time status because of COVID-19.

For loans in default that are enrolled in a rehabilitation program, each month during the collection suspension will count as a month in which an on-time rehabilitation payment was made–even if no payment is made.

How will the CARES Act suspension impact my Credit Report? 

Your credit report should not be impacted because any payment that has been suspended is treated as if you made a regularly scheduled payment.

If my student loan is in default, will collections continue on that debt during the COVID-19 emergency?

The CARES Act suspends all forced collection of defaulted Direct Loans and Department-owned FFEL loans until September 30, 2020. This includes non-judicial wage garnishment, tax offsets, and federal benefit offset (e.g., seizure of Social Security benefits). There is also a catch-all provision to cover other types of involuntary collection by the Department of Education. However, “involuntary collection” isn’t defined in the Act, so as of this writing, it is not clear exactly what kinds of forced debt collection are not allowed.

For more information visit the Student Loan Borrower Assistance's webpage.


How will I know if the CARES Act affects my student loan?

The CARES Act requires the Secretary of Education to notify you if your payments have been suspended and interest waived, or if involuntary collection on your loans has ceased. Notifications should be received within fifteen days of these changes. 

The notification will also inform you of your option to continue making payments toward your principal. Beginning on August 1, 2020, the CARES Act also requires the Secretary to give you notice at least six times, stating when your normal payment obligations will resume and that the you have the option to enroll in income-driven repayment.

What if I withdrew from school due to COVID-19? 

If you withdraw from school as a result of COVID-19, the CARES Act requires the Secretary to cancel your Direct Loan for the payment period in which you withdrew.

Last Review and Update: Apr 01, 2020