What the Coronavirus Aid, Relief, and Economic Security (CARES) Act means for the U.S. economy is still being unpacked, but some student loan borrowers at least will see some immediate and unambiguous relief. 

The $2 trillion coronavirus relief package automatically suspended payments on student loan payments and waived interest for the next six months, until September 30. This includes undergraduate, graduate, and parent loans issued by the federal government. 

The measure followed a less ambitious executive action by President Donald Trump, who waived interest for two months. This has led to some confusion about what exactly is expected of borrowers. Here’s a short primer on the new rules and what they mean for you. 

No request required

Trump’s original measure waived interest payments for 60 days. Some misconstrued this as suspending payments, but it really meant more money went directly toward the principal. 

The relief bill takes it several steps further. All federally-held student loan payments are now automatically suspended for six months, beginning retroactively from March 13. Interest increases have been waived for the period as well. 

This change is automatic and universal, so review your student loan statement to make sure you haven’t been charged late fees. You do not have to request a forbearance.  

Private loans

The provision does not apply to private loans, which account for 15 percent of student debt. Many lenders, however, are offering assistance in the form of limited forbearance, payment assistance, waivers on late fees, and a pause on reporting to credit bureau agencies. Lenders may be more or less transparent about what’s available, so make sure to reach out directly. 

Money back 

For those already behind on payments, the U.S. Department of Education is pausing and refunding any wage garnishments made since March 13. The agency said a total of $1.8 billion will be returned to more than 830,000 borrowers. It still falls on employers to change borrowers’ paychecks, so the department is monitoring compliance with the request. 

Pay if you like

The option is still open for paying your loans if you can afford it, but all payments will go toward the principal, assuming the interest accrued before March 13 has been paid off, and in addition, debit payments have been automatically paused. 

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