How Does the COVID-19 Stimulus Bill Affect My Student Loans?

As a leading institution providing vocational training programs in Bucks County, Pennco Tech understands the importance of making students aware of how the COVID-19 pandemic affects their financial standing. Recent legislation has outlined provisions and relief efforts for small business owners, insurance coverage, tax refunds, and more — including student loans.

The CARES Act and Student Loans

The Coronavirus Aid, Relief, and Economic Security (CARES) Act helps most federal student loan borrowers by putting a temporary pause on payments — including principal and interest — on federally-held loans through Sept. 30. In other words, qualified borrowers will not have to make loan payments for these six months, nor will interest accrue.

With that said, here are a few things student loan borrowers need to know about the CARES Act:

The Temporary Pauses Are Automatic

For qualified borrowers, this new legislation pauses student loan payments and involuntary collections automatically — giving individuals facing sudden financial hardship one less thing to worry about. Earlier in the public health crisis, federal student loan borrowers were advised to apply for a two-month administrative forbearance. However, the CARES Act replaces the need for this action.

Being aware of this helps avoid student loan scams. You are not required to pay a fee for the temporary pause or interest waiver.

Not All Federal Student Loans Qualify

The CARES Act excludes borrowers with Perkins and Federal Family Education (FFEL) loans. These are usually older loans, as these programs no longer exist. Still, many borrowers are repaying them — but will not receive benefits.

Private Student Loans Do Not Qualify

If your student loan was excluded from temporary benefits, you might still seek relief by reaching out to your loan servicer to apply for income-driven repayment (IDR) or forbearance.

Loan Forgiveness and Rehabilitation Programs

Each month during the temporary pause will count as if the borrower had completed payment for a loan forgiveness or rehabilitation program.

Continuing to Make Payments

If you can, you may consider continuing to make student loan payments. In fact, making payments while your student loan is not accruing interest will help you pay off the loan even faster.

For more information about our curriculum offerings, including everything from automotive technology to medical assistant training programs in Bucks County, contact Pennco Tech today!