On Friday, December 4, 2020, the United States Department of Education (ED) announced that coronavirus student loan relief measures have been extended through January 31, 2021. Interest rates on eligible federal student loans will stay at 0% and federal student loan payments will remain suspended until February 1, 2021.
The extension affects the approximately 42 million federal student loan borrowers who owe a collective $1.57 trillion in federal student loans. These borrowers will not need to make a federal student loan payment until their payment date in February 2021.
The instruction to halt wage garnishing for those with defaulted student loans remains in place until February 2021 as well. Borrowers in default who have their wages garnished will receive a refund.
In her statement, Secretary of Education, Betsy Devos, said, “The coronavirus pandemic has presented challenges for many students and borrowers, and this temporary pause in payments will help those who have been impacted.”
Secretary Devos also hopes the extension will give Congress more time to pass new coronavirus relief measures. She said, “The added time also allows Congress to do its job and determine what measures it believes are necessary and appropriate. The Congress, not the Executive Branch, is in charge of student loan policy.”
The original coronavirus-related student loan relief measures came on March 20, 2020, a week after President Trump declared a national emergency due to the coronavirus. Secretary DeVos dropped all interest rates on federal student loans to 0%, suspended payments, and stopped collections activity for 60 days.
On March 25, 2020, Congress passed the CARES Act, extending the relief measures through September 30, 2020. Then, on August 8, 2020, President Trump issued a memorandum ordering the Department of Education to extend the relief measures through December 31, 2020. Secretary DeVos fulfilled this memorandum on August 21, 2020.
According to data from higher education expert Mark Kantrowitz, the majority of borrowers took full advantage of the relief measures. Only 4.6 million borrowers (11% of total federal student loan borrowers) have continued to repay their federal student loans since student loan relief measures began in March 2020.
Those borrowers, and any others who want to make payments, can continue to do so even with the new extension. They’ll benefit greatly from the 0% interest rate as their payments will directly pay down principal. Borrowers can opt out of the student loan administrative forbearance to resume autopayments of their student loans, or they can remain in administrative forbearance and manually make additional payments.
For the remaining 89% or 37.4 million federal student loan borrowers, the extension grants another month to prepare for repayment.
Until payments resume in February 2021, there are a few steps federal student loan borrowers can take to put themselves in a good position:
- Apply for an income-driven repayment plan
- Recertify your income if it has decreased since your last certification
- Update your contact information with your loan servicer(s)
- Refinance your private student loans to lower the monthly payment
- Look into your forbearance or deferment options if you think you’ll need further assistance come February
Learn more about the coronavirus and student loans with these articles:
- Student Loan Forgiveness: Coronavirus Edition
- Student Loan Grace and Forbearance Coronavirus Relief: What You Should Know
- Which Student Loans are Covered By the CARES Act?
- Should I Refinance Student Loans During the Coronavirus Pandemic?
- How Coronavirus Impacts Parent Student Loans – What Borrowers Need to Know
- Tips on Paying Student Loans During Coronavirus for All Borrowers
