Written By Caitlin See
The Coronavirus Aid, Relief and Economic Security (CARES) Act includes provisions designed to provide relief to federal student loan borrowers. This landmark bill includes six months of student debt relief by suspending payments and providing 0% interest through September 30, 2020, for federally held student loans. President Trump and President Biden both extended this pause all the way until August 30, 2023, unless courts rule on student loan relief lawsuits sooner.
While most borrowers will benefit from these relief measures, millions of borrowers were left out in the cold, including those with loans held by a commercial lender under the Federal Family Education Loan Program (FFELP) and borrowers with Department of Health student loans. Countless borrowers who have private student loans that won’t receive help from the government either.
But borrowers seeking loan forgiveness with the Public Service Loan Forgiveness (PSLF) program or under an income-driven repayment (IDR) plan scored an extra bonus. Each suspended payment, or nonpayment, during the time frame specified in the CARES Act will count toward forgiveness.
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How does COVID-19 affect student loan forgiveness programs?
According to the Consumer Financial Protection Bureau, “suspended payments will count towards any student loan forgiveness program, as long as all other requirements of the loan forgiveness program are met.”
This means even if you aren’t making a monthly payment, you’ll still receive credit as if you are. Think of it as a $0 qualifying payment.
For instance, let’s say you’re a physician working toward PSLF. The six months of payments for mid-March through September will count toward the 120 payments you need to qualify for forgiveness.
Keep in mind the PSLF program requires that you have Direct Loans that are enrolled in an IDR plan. And monthly payments must be made while working full time for a qualifying employer like a government entity or nonprofit organization.
Suspended payments also apply to your forgiveness count if you’re on an IDR forgiveness plan. But you’ll need to make 20-25 years’ worth of qualifying payments to be eligible for loan forgiveness.
These coronavirus student loan forgiveness credits can save you a nice chunk of cash, regardless of which forgiveness path you’re pursuing. This benefit is important because freed up money may be needed elsewhere if your family’s income has been impacted by this pandemic.
Are these benefits automatic?
The Department of Education initiated an automatic administrative forbearance for all qualifying loans. But you can opt out of the forbearance or choose to continue making whatever payments you can if you want to pay down your balance.
You should consider continuing making payments if you aren’t pursuing forgiveness to take advantage of the 0% interest rate and then explore refinancing options once these relief measures expire.
If you are pursuing forgiveness, there’s no reason to make payments during this relief period because each suspended payment counts toward your overall loan forgiveness payment count. By taking advantage of this forbearance period, you can use those funds to pay immediate bills, pad your emergency fund or max out your retirement account.
Request a refund if you’re pursuing loan forgiveness
Initially, loan servicers were scrambling to implement these unprecedented directives. So, many borrowers either made their March student loan payment as scheduled or had their account auto-drafted.
But even though the CARES Act was signed into law on March 27, the outlined student loan relief measures are retroactive to March 13.
If a payment was made between March 13 and September 30, you can request a refund. And you absolutely should if you're working toward student loan forgiveness.
To request a refund, contact your loan servicer directly. Even though phone lines were jammed in recent weeks, it can only take a few minutes to reach a representative and request a refund.
Keep in mind that processing times for refunds may be several weeks. But eventually, your refund will make its way to you.
Common questions for student loan forgiveness payments during COVID-19
Here are answers to some of the most common questions related to payments and student loan forgiveness in 2020.
Can I consolidate my loans to access coronavirus student loan benefits?
You can consolidate your FFEL or Federal Perkins loans that aren’t owned by the Department of Education into a Direct Consolidation Loan. The new loan would then be eligible for 0% interest and payment suspension. But be aware that any outstanding interest will capitalize and increase your principal balance. Moreover, your interest rate could end up being higher than what you’re currently paying.
Does consolidation affect student loan forgiveness?
You’ll lose all credit toward forgiveness when you consolidate a student loan. So, consolidation may not be in your best interest if you have FFEL loans with years of income-based repayment credit.
Do I need to do anything if my payments are auto-debited?
If your student loans are set up on autopay, you shouldn’t have to do anything to suspend your payments. Your automatic payments should resume when the forbearance period ends. Your loan servicer will begin notifying borrowers of upcoming payments as the date approaches for the end of the CARES Act relief period.
How is my payment applied during the administrative forbearance period?
If you choose to make a payment between March 13 and September 30, your full payment will be applied to your principal, but only after the accrued interest is paid off.
Check out the Federal Student Aid website for a continuously updated list of student and borrower questions.
Additional student debt relief
If your loans didn’t qualify for benefits under the CARES Act, contact your lender to discuss relief options. Many lenders are offering three months or more of paused payments.
You can also apply to enroll in an IDR plan so you can take advantage of the free forgiveness credits and reduce your monthly payment when required payments resume.
Additionally, certain higher education groups are calling for the government to extend current relief measures and expand borrower benefits. For example, the American Council of Education, which includes more than 30 other higher education groups, has requested that Congress extend CARES Act student loan benefits to at least June 2021 or until unemployment falls below 8% for three consecutive months. These and other proposals are just requests at this time, but they show that the discussion around student loan borrower relief isn’t going to be over anytime soon.
Not sure what to do with your student loans?
Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).
Have you heard of how long it is taking to be enrolled in PSLF? I sent in an application back in January via fax and snail mail with a return receipt. I got the receipt from the snail mail within a week but we are coming in on 4 months and haven’t heard a peep. I know a lot is going on in the world right now but was curious if you have heard others having similar experiences or if I should be calling to check?
You should have heard back by now but I bet the pandemic has slowed it by months
Call them and they will push your stuff through. I submitted my Employer proof in January through website and in April I let them know they never added my additional months. Within 2 weeks, my papers were processed and a letter sent to me.
The studentaid.gov website just published FAQ about the CARES Act Forbearance & PSLF. It states the following :
“Q: NEW: My Income-Driven Repayment (IDR) recertification date is coming up soon. Will the administrative forbearance affect when I should recertify?
A: Yes. You will not have to recertify your income before Sept. 30, 2020, regardless of whether your recertification date would have happened prior to Sept. 30, 2020. As part of the administrative forbearance, your recertification date has been pushed out six months from your original recertification date. You will be notified of your new recertification date before it is time to recertify. ”
I sent in my IDR re-certification TODAY since it was due, which will unfortunately double my payment once we’re required to begin paying again. I was too nervous to miss any months of credit to PSLF, but now it appears we can remain on our current payment for 6 more months. I would really like 6 more months at the lower payment amount, assuming payments resume. Can I rescind my IDR re-certification? What should I do?
You can’t rescind your re-certification. Maybe you’ll get “lucky” and it will be rejected due to an error.
Quick update for everyone: Fedloan did let me request to “cancel” my IDR re-certification while it was under review. I had to wait until they received it from Dept of Ed but then I was able to request it to be cancelled with Fedloan and therefore not processed. Fingers crossed this all works out!
Just curious why you decided to cancel the recertification? Do you have to rescind it if it’s going to be pushed back until after 12/30/2020?
I was worried they would process it if received and re-calculate my payment (which will increase for sure). I wanted to benefit from having a few more months at the lower payment amount after the $0 ends but before my pushed out re-certification date. (Oct-March at the time, but now Jan-March) I think they have to process a received IDR form.
I made all my payments during CARES and applied for forgiveness which I should have received. Instead they are refusing to process any of the payments towards forgiveness until the CARES thing ends. grrrrrrrrrrrr. I hope to god they don’t extend this any longer. I should have had this all forgiven already but they refuse to process anything!!!!
What is considered full-time? Some employers consider 32+ hours full time, others 40 hours. Also, how will they confirm this?
Here’s an article about what counts as full time for PSLF.
I received notification about needing to recertify for my IDR plan by 8/27/2020 however the FAQ on the studentloans.gov and every CARES Act documentation I have read states that “You will not have to recertify your income before Sept. 30, 2020, regardless of whether your recertification date would have happened prior to Sept. 30, 2020.” I called FedLoan today to inquire about this and according to the representative I spoke to, because my “anniversary date” is 10/1/2020, this does not apply to me even though they are asking me to recertify by 8/27/2020. Has any one else run into this issue or any advice on resolving this? Seems once again FedLoan is unaware of how to enact new policies put into effect.
I have. Fedloan explained they ask you to re-certify well before your anniversary date. I believe the anniversary date is your true deadline for re-certifying. Unluckily, your 10/1/20 anniversary date would not have qualified you for the extension due to the CARES Act.
Now, thankfully, the Federal Student Aid FAQ has been updated to “You will not have to recertify your income before Dec. 31, 2020, regardless of whether your recertification date would have happened prior to Dec. 31, 2020.”
Back in June, I was notified that my recertification paperwork was due by end of July. I submitted mine and received a notification that it was placed on HOLD. Now, when i check the status it says that it is placed on HOLD and will be processed after 12/30/2020.
So will my $0 payments still count towards PSLF until the end of the year? Do I need to rescind the IDR paperwork to make sure I am still on my current IDR (that was set to expire sep 30,2020)? What do i need to do to make sure that my payments will continue to be counted?
Servicers are holding off on counting PSLF payments until the suspension expires. It’s bad practice in my opinion, but it’s what I’ve heard from several borrowers. It should update at the end of December (or when the suspension is over, if they extend it again).
Back in January, February, March, 2010, I had a lower payment forbearance applied to my student loans in the amount of $250 each month. I’m currently on an IDR plan, and have already paid more than 120 payments that should qualify, but Fedloan says quite a few don’t and after asking many times since 2018 to review the payments and then review again, they said a few more qualified each time. They’re currently still reviewing four payments (there are even more they should be reviewing as well) not related to that forbearance since May 8th. I am told the forbearance for which I have receipts the payments were debited and a letter from the servicer at that time don’t count even though it wasn’t a regular forbearance. Is this correct?
During the CARES Act forbearance, the suspended payments still count for PSLF qualifying payments. The loan services haven’t been updating the loan counts to reflect this – instead, they’re waiting until the forbearance is over to update them all at once.
Thanks! I realize I probably should have asked the question somewhere else on your site because it’s has to do with pre-Covid 2010 and not an actual forbearance, but a lower payment forbearance, where I made payments of $250 per month and wanted to see if those will still count toward my 120 payments because while they were lower payments, I did make the payments. Thank you anyway!
I’m wondering: I’m on IDR for PSLF. If I make a payment during the CARES Act suspension, do I then get 2 qualifying payments for 1 month (1 from the CARES Act and 1 from the payment I actually made)?
No, you’d only get 1 qualifying payment. Since your $0 payments are counted toward the 120 you need under the CARES act, we recommend you not make any payments during this time.
Good to know! Thank you!