(Provided by Cambridge Credit Counseling)
The U.S. Department of Education set federal student loan interest rates at 0% for 60 days beginning on March 20, 2020. Subsequently, the CARES Act suspended payments for federal student loan holders through September 30, 2020. Notifications will be coming soon, but it would be a good idea to check online accounts in a few weeks to confirm no payment is due. PLUS loans are included in the waiver, but FFEL, Perkins and private loans are not included. While FFEL loan holders could consolidate those loans now and gain relief until October 2020, there is likely no reason to include a Perkins loan in that strategy as they’re already incrementally forgivable for teachers.
For NYSUT members aiming for Public Service Loan Forgiveness (PSLF), the waiver means that you will receive credit for making six payments toward the 120 needed for forgiveness -- without having to actually make a payment. There's also no need to pay down the principal balance because your goal in PSLF is to maximize the amount to be forgiven (in other words, to pay as little as possible over time until you've made 120 qualifying payments). If your loans are not eligible for PSLF, and you can afford to, you might choose to make payments until October 2020 (as those will go directly toward reducing your principal balance). If you are holding private loans, you should make contact with your lender as soon as possible to inquire about any temporary relief being offered. Many private lenders are also ramping up efforts to assist consumers and may offer fee waivers and/or partial payments until the crisis is over.
If you were already 31 days past due on your federal loans, the initial forbearance offered by the government has also been extended to September 30, 2020, and collection efforts are supposed to have been stopped until then. The same is somewhat true for any Treasury offsets that were in the works, but only through mid May 2020. The U.S. Department of Education has indicated it will refund $1.8 billion to more than 830,000 borrowers whose offsets were in the process of being withheld on March 13, 2020, when the COVID-19 national emergency was declared. Details about how those refunds will be made have not yet been released. For anyone going through the federal student loan rehab process, the six month payment waiver also applies to you -- enabling you to reach the nine required payments much easier.
NYSUT Member Benefits endorses a student loan and debt counseling program through Cambridge Credit Counseling. Click here for more information, or contact a Cambridge counselor toll-free at 888-254-9827 with any student loan questions or 888-254-0398 with any credit or debt-related questions.