Learn how the CARES Act can assist those with student debt.

If you've faced financial strain due to the pandemic—an experience shared by many Americans—your student loan payments might feel overwhelming. On average, these payments total $393 monthly. Fortunately, the federal CARES Act may allow you to temporarily halt payments entirely. This legislation supports most federal student loan borrowers, so here's a breakdown of the help it offers.

CARES Act Support for Student Loan Borrowers

This stimulus package aims to mitigate the economic impact of COVID-19, providing relief to those burdened by student debt. Key provisions of the CARES Act include:

… Suspension of Federal Loan Payments.

The U.S. Department of Education is automatically pausing payments on certain federal student loans until September 30, 2020, with interest rates set at 0%. Your account will be reported positively to credit bureaus. Verify your loan type to check eligibility for these benefits. The following loans qualify:

  • Direct loans (both subsidized and unsubsidized)
  • Federal Family Education Loans (FFEL) owned by the Department of Education
  • Perkins loans held by the Education Department

… Credit Towards Loan Forgiveness.

If you're part of the Public Service Loan Forgiveness program or an income-driven repayment plan, suspended payments will count toward your forgiveness goals.

… Cessation of Collection Activities.

The Department of Education is offering relief to borrowers in default. Until September 30, the agency is stopping involuntary collections on federal student loan debts, including wage garnishments and tax refund offsets.

… Employer Assistance for Student Loan Payments.

Employers can now provide up to $5,250 in tax-free assistance for tuition or student loan payments until December 31. This benefit applies to both federal and private loans, allowing borrowers to benefit without incurring tax liabilities.

… Credit Reporting Protections.

Strong credit is vital for economic recovery. If you enroll in a hardship program due to COVID-19, your lender must report your account as being in good standing to credit bureaus for the duration of the emergency and for 120 days thereafter. Regularly check your credit reports to ensure this is reflected, regardless of loan type.

Limitations of the CARES Act for Borrowers

While the CARES Act offers significant support, some borrowers may still need to make payments during the pandemic.

Nearly 12% of federal loans do not qualify for these protections, including those held by commercial lenders and certain Perkins loans owned by educational institutions. Additionally, borrowers with private loans won't receive the same relief.

Discussions about loan forgiveness were also abandoned before the law's enactment.

If you're struggling to manage your student loan payments, explore options available to maintain your account in good standing during this challenging time. Many loan servicers are ready to assist you.