Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
The CARE Act passed over the weekend extends the 60 day forbearance, interest waiver for all Direct Loans, and collection activities for 6 months. Until the Department of Education can update its rules to be CARE compliant, here is a summary of what to expect:
Coronavirus and Forbearance Info for Students, Borrowers, and Parents
Interest Suspension:
- On March 13, 2020, the president announced that interest would be waived on all federally held student loans. Which loans are covered by the announcement?
All loans owned by the U.S. Department of Education (ED) will have interest waived. That includes Direct Loans, as well as Federal Perkins Loans and Federal Family Education Loan (FFEL) Program loans held by ED.
- How can I take advantage of this program if I have Federal Family Education Loan (FFEL) Program and Federal Perkins loans not owned by ED?
You could consolidate your FFEL Program or Federal Perkins loans not owned by ED into a Direct Consolidation Loan, which would be eligible. However, if you consolidate, and after the 0% interest rate waiver ends, the interest rate may be higher than what you are currently paying, and any outstanding interest will capitalize, meaning that any outstanding interest is added to your principal balance.
- Will my monthly payment go down because interest is being waived?
No. Your monthly payment will remain the same, but the full amount of the payment will be applied to already accrued interest and/or outstanding principal.
- How long will interest be waived?
Interest will not accrue on federally held student loans for at least 60 days, beginning on March 13, 2020. ED may extend that period, depending on the status of the COVID-19 national emergency.
Administrative Forbearance:
- On March 20, the president said I can suspend payments on my loans. What do I need to do to suspend my payments?
You can ask for an administrative forbearance. Being in an administrative forbearance means that you can temporarily stop making your federal student loan payments without becoming delinquent.
- What if I am already more than 31 days past due on my payments?
If you’re at least 31 days behind on your payments as of March 13, 2020 or become more than 31 days delinquent after that date, you’ll automatically be placed in an administrative forbearance to give you a safety net during the COVID-19 national emergency.
- If I want an administrative forbearance, do I have to request it, or will I get one automatically?
If you want to request an administrative forbearance, you should request one by contacting your loan servicer.
Loss of Income Options:
- My company has closed because of coronavirus/COVID-19. I’m not making any money and can’t pay my student loan bill. Can I stop making payments until I’m working again?
If you’re having trouble making payments, contact your loan servicer as soon as possible.
- I’m currently on an income-driven repayment plan. I’m making a lot less money because of the coronavirus outbreak and don’t know when my income will return to the same level. What can I do?
If you’ve had a significant change in income, you can ask to have your monthly payment recalculated at any time
IRS Tax Refund:
- On March 25, 2020, ED announced that my federal tax refund would not be withheld to repay my defaulted federal student loan debt. My refund has already been taken. Can I get it back?
Your federal tax refund will be returned to you if your refund was in the process of being withheld—on or after March 13, 2020, the date the president announced executive actions related to the COVID-19 national emergency—for the repayment of a defaulted federal student loan. This flexibility will last for at least 60 days from March 13, 2020.
Wage and Social Security Benefit Garnishments:
- On March 25, 2020, ED announced that a portion of my Social Security payment, including disability benefits, would not be withheld to repay my defaulted federal student loan debt. My Social Security payment has already been taken. Can I get it back?
The portion of your Social Security payment that was taken will be returned to you if your payment was in the process of being withheld—on or after March 13, 2020, the date the president announced executive actions related to the COVID-19 national emergency—for the repayment of a defaulted federal student loan.
- On March 25, 2020, ED announced that my wages would not be garnished, but money is still being taken from my paycheck. What should I do?
If your wages continue to be garnished after the president’s March 13, 2020, announcement, you should contact your employer’s human resources department. If ED receives funds from your paycheck that should have been stopped as a result of the March 13 announcement, we will refund your garnished wages.
If you or anyone you know may be facing difficulty with any of the processes related to their student loans and the COVID-19 changes, feel free to contact the office to schedule a telephone consultation. The office number is 813-258-2808, please leave a message if prompted and we will contact you to schedule a time for your 30- minute consultation which can be done remotely without having to leave your home. You can also email using the link below if you prefer. Please see our consultation guarantee and Law Pay link if you wish to schedule a time to speak with us.
