You guys, we all know 2020 was insane. But here’s some good news: You may not need to make student loan payments until October of this year because the student loan relief that came from the CARES Act has been extended through September 30, 2021.1 Let’s talk about what this actually means so you know what’s happening, and so you can get that student loan debt out of your life for good.
What Did the CARES Act Do?
The CARES Act (or Coronavirus Aid, Relief, and Economic Security Act) was a stimulus bill passed by Congress in the early days of the COVID-19 pandemic to help the economy (and a lot of Americans) get back up and running.2 The CARES Act offered temporary payment suspension, a 0% interest rate on student loans, and a hold on all collections and wage garnishments—or money taken out of the borrower’s paycheck to repay the loan—on defaulted loans.3
Once it expired, then-President Donald Trump extended student loan relief until January 31, 2021. But now that President Joe Biden is in office, he’s extended it again until September 30, 2021.4 So, what does that mean for you and your loans?
What Will the Student Loan Payment Relief Extension Do?
First, let’s clear something up: This isn’t the same thing as a student loan forgiveness plan. You’ll still have to pay the full amount of your student loans eventually unless some other policy or relief package is put into place.
The basic idea of this extension is that student loan interest rates will stay at 0%, and payments on all federally owned student loans will be paused through the end of September.5 These types of loans are included:
And get this: If you have those types of federal student loans, you’re already included—you don’t have to sign up or fill out any paperwork.6 Nice! But it’s a good idea to look at the Federal Student Aid website to double check that your loans qualify.
How the Extension Affects Different Loan Situations
If your loan situation’s different than the typical repayment process for federal student loans, let’s break down how this extension could impact you. Here are some potential scenarios:
It’s always a good idea to check in with your lender to make sure you’re still meeting all the requirements and see if there’s anything else they can do to help you during this season.
What You Can Do to Pay Off Your Loans
Remember, the extension isn’t going to get rid of your debt. It’s just going to drag out your repayment period and (hopefully) help you out if you’re struggling financially. Times are tough, but if you can get a solid plan of action in place, you’ll be able to get rid of those student loans faster than you might think.
Here are some practical steps you can take to pay off your loans based on your current financial situation:
Let’s be real: This is a really weird time. But I know you can get through it, and come out stronger on the other side. For more details on how this extension works (and how it can work for you), check out this article!