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  • April 06, 2020

    Federal Student Loans and the CARES Act

    The current COVID-19 pandemic impacts everyone and everything, including federal student loans. In this Tip of the Month, Liz Groeschel details Section 3513 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides temporary relief for federal student loan borrowers.

    Elizabeth A. Groeschel

    student loans

    The current COVID-19 pandemic has impacted everyone and everything, including federal student loans. Section 3513 of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted on March 27, 2020, provides temporary relief for federal student loan borrowers.

    Section 3513 begins on page 333. Here are the highlights:

    • The relief applies to most federally held loans. The Act includes student loans owned by the federal government, like Direct Loans and federal Family Education Loans. The Act excludes Perkins loans, commercially-held Federal Family education Loans, and private student loans.

    • The relief includes suspension of all payments due for qualifying loans until Sept. 30, 2020. This means that borrowers will not have to make payments, but still can make payments.

    • The relief includes zero percent (0%) interest on all qualifying loans until Sept. 30, 2020. This provides a unique opportunity for borrowers to pay directly towards their loan principle.

    • For those working towards Public Service Loan Forgiveness, each month of relief will still count as if you made an eligible payment. The payments are $0. Therefore, the $0 is automatically satisfied, counting as an eligible payment.

    • Qualifying loan servicers have until April 11, 2020, to inform borrowers of these temporary changes, and must notify borrowers again by Aug. 1, 2020, about the termination of the temporary changes.

    • All collection efforts on qualifying loans are temporarily stopped until Sept. 30, 2020. The Act stops wage garnishments, tax refund withholdings, reductions of federal benefits, and any other involuntary collection activity for qualifying loans.

    Elizabeth Groeschel Elizabeth Groeschel, Marquette 2015, is a managing attorney in the Oshkosh office of Legal Action of Wisconsin, where she practices public interest law.

    If you aren’t sure whether or if this applies to you, or are wondering how it will impact you, contact your loan servicer for more details.

    Where to Find Out More

    Other than your loan servicer, here are two additional credible sources: posted about the CARES Act, outlining a few questions that the Act leaves unanswered:

    • When does the suspension of payments start?

    • Will loan servicers automatically stop auto-debit payments?

    • What impact will this have on income-driven repayment recertification deadlines?

    • For Public Service Loan Forgiveness, what happens to borrowers who were working for qualifying employers, but are unable to work or whose hours are cut below full-time status because of COVID-19?

    Another resource for ongoing CARES Act and student loan information is Forbes’ Senior Contributor Zack Friedman. Friedman’s blog includes many articles about student loans and public service loan forgiveness, and most recently, the CARES Act and its impact on student loans.

    The Public Interest Law Section knows how important student loans and Public Service Loan Forgiveness are to our members, and we hope to continuing providing relevant information to you.

    More on Public Service Loan Forgiveness Program from the Public Interest Law Blog

    Find out more about the Public Service Loan Forgiveness program from these articles from the Public Interest Law Section's blog:

    • Feb. 3, 2020: Tax Implications of Public Service Loan Forgiveness

      If your student loans are forgiven as part of the Public Service Loan Forgiveness program, are they taxed? Amy Devine discusses the tax implications of student loans and forgiveness programs.

    • Jan. 14, 2020: Public Interest Loan Forgiveness and Qualifying Payments

      Attorneys seeking to use the Public Service Loan Forgiveness program must comply with certain requirements to have their student loans forgiven. Amanda Rabe discusses qualifying payments in this Tip of the Month.

    This article was originally published on the State Bar of Wisconsin’s Public Interest Law Section Blog. The blog is a section benefit. Visit the State Bar sections or the Public Interest Law Section web pages to learn more about the benefits of section membership.

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