Close
ThinkAdvisor

Financial Planning > College Planning > Student Loan Debt

Moratorium on Student Loan Payments Extended

X
Your article was successfully shared with the contacts you provided.

The Department of Education said Friday that it is extending the moratorium on federal student loan payments to Dec. 31, 2020.

The moratorium, which was included in the CARES Act, was scheduled to expire after Sept. 30, 2020. 

The extension — one of several executive orders that President Trump issued on Aug. 8 — directed Education Secretary Betsy DeVos to “provide such deferments to borrowers as necessary to continue the temporary cessation of payments and waiver of all interest on student loans held by the Department of Education until Dec. 31, 2020.”

Borrowers will not be assessed any interest in the interim, but they do have the option of making payments if they choose to.

In addition, collections on defaulted federal held student loans will be halted, and any such borrower whose employer continues to garnish their wages for payment of those loans will receive a refund of those garnishments, according to the press release from the Department of Education. 

The DOE also said the moratorium will not impact borrowers seeking forgiveness under an income-driven repayment plan or Public Service Loan Forgiveness (PSLF) program.

In both cases, the non-payments will count toward the payments required to participate in those programs. These programs, however, have come under fire from the Trump Administration, which has proposed eliminating the PSLF and sharply modifying the income-driven repayment program.

The loan moratorium applies to undergraduate direct subsidized and unsubsidized student loans, Parent PLUS loans, and Stafford graduate and Graduate Plus Loans.

(Related: 8 Ways the Stimulus Package Helps Student Loan Borrowers)

The DOE’s Federal Student Aid (FSA) program will be notifying borrowers of the loan relief extension, and borrowers can expect to see the extension reflected in their accounts over the next several weeks, according to the DOE press release. 

In total, about 43 million borrowers owe $1.51 trillion in student debt.