What Students and Student Loan Borrowers Need to Know About COVID-19 Relief

We are in an unprecedented state of emergency with economic impacts. And during this time, many people have concerns about student loan repayment. Many of our social media followers have reached out to us with fantastic questions. If you are a student or student loan borrower, we want to make sure you have an understanding of your options.

Also, for more information from the U.S. Department of Education, please go to: https://studentaid.gov/announcements-events/coronavirus.

Note: This situation is changing and we will be updating this blog as needed. We will continue to post to our Edvisors Facebook and Edvisors Twitter pages.

Last Update: Aug. 24, 2022

On March 13, 2020, the President of the United States waived the interest on loans owned by the U.S. Department of Education (ED). Since then the Coronavirus Aid, Relief, and Economic Security (CARES) Act (stimulus package) passed on March 27, 2020 which also had an impact to students and borrowers. The CARES Act has implemented a 0% interest rate and suspension of payments for ED owned loans. Loans owned by FFEL program lenders and institutions that hold Perkins loans are not included in the CARES Act. Since March, the President and the United States Secretary of Education, Betsy DeVos, have offered benefits to extend some borrower protections. Previously set to expire May 1, 2022, The Biden administration has now indicated they will extend the student loan relief through Dec. 31, 2022.

Read more about the most up to date information on Biden student loan forgiveness and repayment relief here!

Enrolled Students Impacted by COVID-19

• My campus closed, can I get a refund for housing?
• I need help moving out.
• I need help finding housing while my school is closed.
• I need help finding food, I depended on my school’s meal plan.
• I was working a Federal Work-Study job to help me pay for my living expenses. Can I still get paid even if I can’t work?
• How do I contact my closed school?
• There has been a change in my financial situation. I need additional financial assistance to continue my program.
• I am not able to continue classes for the rest of the term.
• I had to drop out of my term, and I’m worried about my federal loan and grant limits.
• I had to drop out and I’m worried about how it will affect my Satisfactory Academic Progress.

Future Student Enrollment Concerns

Student Loan Borrowers Impacted by COVID-19

• Who is my loan servicer?
• How do I know if my loan is owned by ED or not?
• Contacting your lender or loan servicer

Private Student Loan Borrowers

• I just refinanced my federal student loans with a private student loan refinance lender.

Federal Direct Student Loan Borrowers and Other ED Owned Federal Student Loans

• Interest waiver for ED owned federal student loans
• Postponing your loan payments
• I made a payment, or had an auto payment made on my loan after March 13, 2020, can I receive a refund?
• My loan was on autopay, will that be automatically stopped?
• I want to continue making payments, can I do that?
• Will the suspension period affect my IDR progress and forgiveness? Will the time I spend in suspension count towards my IDR forgiveness?
• I’m in an IDR plan, why would I continue to make payments if my payments still count as payments towards forgiveness?
• How Do the Interest Waiver and Administrative Forbearance affect Public Service Loan Forgiveness (PSLF)?
• I chose to opt-out of the suspension period and have continued my auto payments. But I just had a change in employment before Dec. 31, 2022. Am I still eligible to postpone my loan payments?
• How will I know when to start making payments again?
• My income has drastically changed due to the pandemic and I was on an IDR plan. What will my payment amount be when I have to start making payments again? I’m worried I won’t be able to afford it.
• My loan was past due on March 13, 2020, do I still qualify for the suspension of payments and 0% interest rate?

Borrowers of FFEL and Perkins Loans Not Owned by ED

• Should I consolidate my loans into the Federal Direct Loan Program?

Defaulted Federal Student Loan Borrowers

• Does my defaulted loan qualify for the suspension of payments and 0% interest rate?
• Will my collection agency continue to demand payments or call me?
• I had auto payments set up on my defaulted loan, will this stop?
• I was rehabilitating my defaulted loan, will my suspended payments count towards my rehabilitation payments?

Enrolled Students Impacted by COVID-19

In the United States, many campuses have closed. While some schools have found ways to continue their curriculum online, not all schools or programs are in a position to do so.

The CARES Act has given schools a bit more flexibility when it comes to ways they manage through this global crisis. Below are some of the common questions that have surfaced, as well as the best places to go for additional help or resources if you need them.

My campus closed, can I get a refund for housing?

Refund determinations will be up to the school. It would be best to contact them.

I need help moving out.

U-Haul has offered students help who need it. U-Haul is offering 30 days free self-storage for college students. This may be helpful if you’re struggling to find a place to keep your belongings, or need additional time to get your belongings home.

I need help finding housing while my school is closed.

For those seeking housing assistance, there may be community resources available to help you. To locate your community resources, check out JustShelter.org.

I need help finding food, I depended on my school’s meal plan.

Many students rely on school meal plans throughout the school year. If you need food assistance, here are some resources to help you:

• FoodPantries.org
• WhyHunger.org

I was working a Federal Work-Study job to help me pay for my living expenses. Can I still get paid even if I can’t work?

If you were working a Federal Work-Study job and you are unable to complete your scheduled hours because of COVID-19 disruption, your school may pay you up to your full scheduled work study award (up to one academic year).

This, however, will be up to your school. Contact your school or Federal Work-Study coordinator.

How do I contact my closed school?

It is best to find contact information on your school’s website or social media channels.

There has been a change in my financial situation. My parents lost their jobs and will no longer be paid. I need additional financial assistance to continue my program.

If there has been a change to your financial situation, it is best to contact your financial aid office.

Remember to address issues for this current enrollment period, as well as future enrollment periods—you may have already completed your FAFSA® for spring 2021 or fall 2021.

I am not able to continue classes for the rest of the term.

If you are unable to continue classes, even though your school has offered a remote way of learning, it’s best to contact your academic advisor or the financial aid office. You may have the option to take a leave of absence.

I had to drop out of my term, and I’m worried about my federal loan and grant limits.

As part of the CARES Act, if you had to drop out as a result of COVID-19:

• Federal Direct Subsidized loans received for your affected term will not count towards your lifetime subsidized loan eligibility.
• Federal Pell Grant funds received for your affected term will not count towards your lifetime Pell eligibility.

I had to drop out and I’m worried about how it will affect my Satisfactory Academic Progress.

If you had to drop out as a result of COVID-19, the courses you dropped will not count toward your quantitative measurement (length of time it takes you to complete your program) for your federal student aid eligibility.

To determine the impact to your school’s academic progress policy, you will need to reach out to your school.

Future Student Enrollment Concerns

At this time it is not clear how future enrollment periods will be impacted. It is best to stay in touch with your college (or prospective college(s)) by checking their website for information.

What we do know. Many colleges have postponed, cancelled, or modified policies or events, such as:

• Campus tours
• Decision deadlines
• Testing requirements

Tips to keep you on track for next year:

• College tours online with our partner, CampusReel.org.
• Apply for scholarships to help cover future college expenses.
• Continue to study for any standardized testing. When it comes back you want to be ready!

Student Loan Borrowers Impacted by COVID-19

Relief offered will depend on the type(s) of student loan you have: ED owned federal student loans, federal student loans not owned by ED, private student loans.

Federal student loan borrowers first need to determine which of their student loans are owned by ED, or held by a private lender.

• Federal Direct Loans: Your federal student loans are owned by ED and eligible.
• Federal Family Education Loan Program Loans (FFEL): For the most part, these loans are held by a private lender and not owned by ED. However, some FFEL loans are owned by ED and you should contact your servicer to verify.
• Federal Perkins Loans: These can go either way. If you continue to pay your school, or your school’s Perkins loan servicer, chances are your loans are not owned by ED. However, some Perkins loans are owned by ED. If you log into the Federal Perkins Loan servicer borrower website (efpls.com) to manage your account, you likely have a Perkins loan owned by ED. You should contact your loan servicer to verify.

Who is my loan servicer?

You loan servicer is the company that has been mailing or emailing your loan statements.

If you don’t know who your federal student loan servicer is, it is best to log into your account at StudentAid.gov. Logging in here will take you to the National Student Loan Database System (NSLDS), where you can locate your loan servicer.

If you have private student loans and you are not sure who to contact, it is best to check your credit report.

How do I know if my loan is owned by ED or not?

You can call your loan servicer, log into your account on StudentAid.gov, or call 1-800-4-FED-AID (1-800-433-3243).

*You may also try logging into your student loan account. Servicers may identify they type of account or loans you have. For example, Nelnet has indicated:

Contacting your lender or loan servicer

This national emergency has borrowers rushing to determine the best way to manage their bills. You may be able to save time by logging into your account and taking some actions online.

If you call your lender or loan servicer, do not be surprised if hold times are a bit on the long side, but it is definitely worth it to take the time now to figure out the best way to manage your loan debt.

Private Student Loan Borrowers

The waiver of interest does not apply to private student loans. However, some lenders have started publishing statements on their website indicating they may be able to assist during this time. If you are facing financial difficulties, due to loss of employment or furlough, contact your private student loan lender as soon as possible. Your lender will be able to explain to you the options you have.

I just refinanced my federal student loans with a private student loan refinance lender. Can I change this?

Unfortunately a private student loan refinance cannot be undone. However keep in mind, the interest rate suspension is only temporary relief being offered to borrowers. Your student loan rate with a refinance lender may be more beneficial to you throughout your repayment term.

Also, if you have already refinanced your student loans, there is no reason why you can’t refinance again.

Federal Direct Student Loan Borrowers and Other ED Owned Federal Student Loans

Interest waiver for ED owned federal student loans

If you have federal Direct Loans or ED Owned federal student loans, these loans are eligible for the interest waiver as of March 13, 2020 until Aug. 31, 2022. You may see adjustments made to your student loan statements for your eligible loans. You should check your account periodically.

During this period, the interest on your eligible loan(s) will not accrue. You do not need to take any action for this to be applied to your eligible loans.

Also, if you had any outstanding interest that was not paid on March 13, 2020, that is still your responsibility to pay.

Postponing your loan payments

The CARES Act has suspended student loan payments on eligible loans from March 13, 2020 through Sept. 30, 2020*. You loan servicer will automatically place your loan in an administrative forbearance during the suspension period for you, and you will not need to take action. *Eligible ED Owned federal student loans have had this benefit extended, and are eligible for automatic loan postponement until Dec. 31, 2022. 

The CARES Act was just passed on Friday, March 27, so you may still be seeing correspondence from your student loan servicer requesting payment. It is still encouraged to review any servicer correspondence you receive. However, if it is a request for payment on your eligible loan, you will not need to make that payment during the suspension period. Chances are your servicer just had these correspondence set before they received guidance on the suspension period.

If you were at least 31 days past due on March 13, 2020, your loan was automatically placed on an administrative forbearance by your loan servicer.

If at any time during the qualifying postponement period (March 13, 2020 until Dec. 31, 2022) you receive notification to repay your ED Owned loans eligible for this benefit, it's best to contact your loan servicer to sort out any issues. 

I made a payment, or had an auto payment made on my loan after March 13, 2020, can I receive a refund?

Yes. If you made a voluntary payment or made a payment because you were on autopay, you can request a refund. You will need to contact your loan servicer to receive a refund.

My loan was on autopay, will that be automatically stopped?

Yes, your auto payments will automatically stopped by your loan servicer. However, if you would like to continue to make payments you can opt-out of the administrative forbearance.

Check to see if you can make this change in your online account, or contact your loan servicer.

I want to continue making payments, can I do that?

Yes, you can continue to make payments on your loan if you would like to. Many borrowers who are not financially affected by the COVID-19 pandemic can make a significant impact to their loan balances while the interest rate is 0%.

Will the suspension period affect my IDR progress and forgiveness? Will the time I spend in suspension count towards my IDR forgiveness?

There will be no impact toward your IDR progress or forgiveness. Your suspended payments will even count towards your IDR forgiveness.

I’m in an IDR plan, why would I continue to make payments if my payments still count as payments towards forgiveness?

Some borrowers may elect to continue to pay down their loan debt, even in an IDR plan.

Some individuals in an IDR plan have been in a period of negative amortization, where their monthly payments will not cover the amount of interest being accrued every month. These borrowers may have a large amount of outstanding interest and their payments are not helping pay down their principle balance. Borrowers may look at this as an opportunity to pay down any outstanding interest they have so their payments could start to pay down their principle balance.

In addition, any amount of federal student loan debt forgiven due to IDR forgiveness is considered taxable. Some borrowers may want to reduce the amount they will have forgiven (especially those who expect a large forgiveness amount) to reduce their tax burden. Borrowers can use the U.S. Department of Education's Loan Simulator to get estimates of the amount they expect to have forgiven.

How Do the Interest Waiver and Administrative Forbearance affect Public Service Loan Forgiveness (PSLF)?

For those seeking PSLF, here is what you need to know.

If before the suspension period you were in an eligible repayment plan, and making payments on eligible loans while working full-time for an eligible employer, and you continue to work full-time for an eligible employer during the suspension period, time spent in the administrative forbearance will be credited as qualifying payments towards PSLF.

Now if your employment status changes, and you are no longer considered full-time, the payments made (or your time in the suspension period) after the change in your employment status will not count as qualifying payments.

If you have a change in employment which would affect your eligibility, any progress you made towards PSLF will not be affected. Payments under PSLF do not need to be consecutive. If you are able to secure another full-time job, it is advised you find work with a qualifying employer to continue your progress towards PSLF forgiveness.

Example for demonstration purposes only—due dates and other considerations could affect your total qualifying payment count:

I chose to opt-out of the suspension period and have continued my auto payments. But I just had a change in employment before Dec. 31, 2022. Am I still eligible to postpone my loan payments?

Yes, you are able to request to opt back into the administrative forbearance offered during the suspension period. Contact your loan servicer to make this request.

You can even request a refund of any payments you made during the suspension period. You would need to contact your loan servicer for the refund.

How will I know when to start making payments again?

The U.S. Department of Education has indicated that loan servicers will contact borrowers towards the end of the suspension period (no later than Dec.) to remind them that repayment will start again.

This is a great time to make sure your contact information is up-to-date in your online account.

If you are concerned about your ability to repay when your loan servicer begins to reach out, make sure to give your loan servicer a call. They will be able to discuss the options available to you to change your repayment plan, or place your loan in a deferment or forbearance after the end of the suspension period.

My income has drastically changed due to the pandemic and I was on an IDR plan. What will my payment amount be when I have to start making payments again? I’m worried I won’t be able to afford it.

If you had a change of income you expect to last beyond Dec. 31, 2022, you can ask to have your IDR payment recalculated.

You can update your income by visiting StudentAid.gov/idr. Click on “Apply Now” and then you will be given an option to “Recalculate my monthly payment.” When your loan reenters repayment at the end of the suspension period, your new monthly payments will resume at the recalculated amount.

My loan was past due on March 13, 2020, do I still qualify for the suspension of payments and 0% interest rate?

Delinquent loans are not exempt from the suspension period or having their interest rate reduced to 0%. Before the CARES Act passed, the U.S. Department of Education was already going to place loans more than 31+ days past due as of March 13, 2020 into an automatic administrative deferment.

Borrowers of FFEL and Perkins Loans Not Owned by ED

At this time, the federal interest waiver and automatic placement of student loans into a forbearance, if at least 31 days past due, is not applicable to loans not owned by the U.S. Department of Education.

The majority (but not all) of FFEL loans, and many Perkins loans are not owned by ED and are held by private lenders. Some FFEL loans and Perkins loans are ED owned and you may need to do a little digging to see who your loan holder is. If your FFEL and/or Perkins loans are ED owned, please see the information regarding the interest waiver and administrative forbearance for eligible loans.

If you are facing financial difficulties, you still have the ability to seek temporary relief. We suggest you contact your loan servicer and discuss your options to change your repayment plan or place your loan in a deferment or forbearance.

Should I consolidate my loans into the Federal Direct Loan Program?

You do have the option to consolidate your FFEL or Perkins loans into the Federal Direct Loan program with Federal Direct Consolidation loan. When you consolidate your loans, the new interest rate on your loans will be the weighted average of the loans you consolidated, rounded up to the nearest 1/8th of a percent. Meaning, at the end of the interest waiver period, your interest rate may be higher. It’s worth it to run the math and determine your best course of action. You can use the U.S. Department of Education’s Loan Simulator to get started.

Defaulted Student Loan Borrowers

For the most part, defaulted student loans are ED owned. That’s because once a loan hits a certain amount of days past due, the FFEL lender (or guarantor) and Perkins loan holder is required to transfer that loan to the U.S. Department of Education. For FFEL loans, the loan officially transfers once the U.S. Department of Education pays the default claim to the guarantor. The U.S. Department of Education then assigns a private collection agency to further collect on that loan.

If your loan is not yet transferred to the U.S. Department of Education, contact your loan holder or ED Default Resolution Group at 1-800-621-3115 for further assistance.

The U.S. Department of Education and the CARES Act have provided relief during the COVID-19 pandemic.

Does my defaulted loan qualify for the suspension of payments and 0% interest rate?

Yes. ED owned defaulted loans do qualify for the 0% interest rate and suspension period.

Will my collection agency continue to demand payments or call me?

The Secretary of Education has told private collection agencies to stop collection of loans and stop collection calls to borrowers.

If you want to continue to make payments, or need assistance, you can reach out to ED’s Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923).

I had auto payments set up on my defaulted loan, will this stop?

Yes. Your auto payments will be suspended for the suspension period. However, if you want to continue to make payments or need to reach your collection agency, contact ED’s Default Resolution Group at 1-800-621-3115.

I was rehabilitating my defaulted loan, will my suspended payments count towards my rehabilitation payments?

Yes.