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Friday, 15 May 2020 12:25

The CARES Act Student Loan Deferment

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To help ease some of the financial stress many Americans are facing due to the Coronavirus pandemic, the Federal Government passed the Coronavirus Aid, Relief, and Economic Securities Act, or the CARES Act in late March. The CARES Act was responsible for a number of programs including the stimulus checks that were distributed in April, but it also provides additional financial relief by deferring Federal student loan payments with 0% interest until September 30, 2020.

Borrowers do not need to do anything to start their payment deferment, as it will happen automatically. Loan servicers are required to send out written notices explaining the deferment. Not all student loans qualify, however, and borrowers need to confirm that their loan is owned by the Federal Government and subject to the CARES Act. Federal student loans that do not qualify include PLUS, Stafford, and Perkins loans held by schools. Loans held by commercial banks and other private institutions are also not eligible for deferment under the CARES Act. To check which loans are covered, borrowers can contact their loan servicer or visit www.studentaid.gov to review the loan details and confirm that the Department of Education is the lender.

Borrowers with the ability to continue making payments to their federal student loans may still opt to pay, as any payments made between March 13, and September 30th will be applied directly to the principal. If your loan does not fall under the CARES Act waiver of payment, you might want to contact your loan servicer to see if they are offering any sort of relief during this time.

If you haven’t already, you may wish to pass this information about student loan deferrals on to your employees to make sure they’ve heard the good news.

As you’re likely aware, the CARES Act also implemented the Payroll Protection Program (PPP) and made changes to FSAs, HRAs, and HSA benefits. Please refer to our April blog post for more information on those topics. If you have any questions about the CARES Act, please contact your Fall River Client Manager today!

Read 302 times Last modified on Wednesday, 27 May 2020 14:21