The U.S. Department of Education has announced a “final extension” of coronavirus emergency relief benefits for borrowers with federal student loans through Jan. 31, 2022.
The original coronavirus relief bill, known as the CARES Act and signed into law on March 27, 2020, helped most federal student loan borrowers by temporarily pausing payments and involuntary collections on federally held student loans through Sept. 30, 2020. The month before it expired, then-President Donald Trump signed a memorandum extending the pause until Dec. 31, 2020. Betsy DeVos, education secretary at the time, announced in early December that the pause would be extended again through Jan. 31, 2021. In January, acting Secretary of Education Phil Rosenfelt extended the pause to Sept. 30, 2021, at the request of President Joe Biden.
As a cumulative result, most borrowers with student loans held by the federal government will not have been required to make payments on those loans, nor have interest accrue on them, for nearly two years per the administrative forbearance. In addition, collections activities such as wage garnishment and the reduction of tax refunds have been prohibited, providing help for student loan borrowers struggling during the COVID-19 pandemic.
“As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment,” Secretary of Education Miguel Cardona said in an Aug. 6 announcement of the extension.
Another extension is great news for borrowers who have been relying on this relief to make ends meet. Here is what you need to know.
Temporary Pauses Are Still Automatic
For qualifying borrowers, the extension will automatically continue the pause on federal student loan payments and involuntary collections through the end of January. The temporary 0% interest rate on all federally held student loans will also continue.
Specifically, collections on defaulted, federally held loans will remain halted, and any borrower with such loans who has had wages garnished during this time will receive a refund of those garnishments. Any qualifying federal student loan payments made since March 13, 2020, the retroactive date of the administrative forbearance period, can also be refunded upon request.
Borrowers are not required to take any action to renew the emergency forbearance or stop collections activities, and these benefits will continue to be applied to all borrowers who qualify.
Months Still Count Toward Loan Forgiveness and Rehabilitation Programs
Another important aspect pertains to those seeking eventual student loan forgiveness or rehabilitation.
Months during the pause will continue to count toward the 120 payments required by the Public Service Loan Forgiveness program — if the borrower works full time for a qualifying employer during the suspension period — and also toward payments that are required to receive forgiveness under an income-driven repayment plan.
Likewise, months during the extended suspension will continue to be counted toward federal loan rehabilitation programs for borrowers with student loans in default. If you have a defaulted federal student loan and enter a new rehabilitation agreement during this pause period — any date since March 13, 2020 — the suspended payments that would have been made from the beginning of your agreement until Jan. 31, 2022, will count.
Borrowers With Ineligible Federal Student Loans Can Still Access Emergency Assistance
The Education Department also previously extended flexibility granted to student loan servicers to assist borrowers who do not qualify for the automatic relief. This allows servicers to grant additional emergency forbearances to borrowers who are still required to make payments on their federal student loans but are struggling to do so.
The final extension again excludes borrowers with Perkins loans not owned by the government and commercially held Federal Family Education Loans, or FFEL loans, that are not in default. These two programs no longer exist, but there are still many borrowers who are repaying student loans received through them.
While these borrowers did not receive the automatic temporary benefits, however, they will continue to be able to seek relief by applying for an emergency forbearance or applying for an income-driven repayment plan.
If you’re not sure what types of student loans you have, contact your loan servicer to find out. If you have an online account with your loan servicer, you can also check there to see whether the benefit was applied to your account. If you find that your student loan was excluded from the temporary benefits, you can still seek relief by contacting your loan servicer to apply for income-driven repayment or forbearance.
More Updates Are Coming
The Education Department and its student loan servicers are working together to get the necessary information about coronavirus relief updates to qualifying borrowers. The Education Department posts details on its FAQ page to help borrowers understand how this extension will affect their loans.
For example, as noted on that page, borrowers in an income-driven repayment plan will not have to recertify their income before the end of the relief period, even if the recertification date would have been earlier. The department will notify these borrowers in advance of their new recertification date. However, borrowers who would like to recertify during the payment suspension can contact their loan servicer.
To ensure that you get the latest updates, make sure that the address and contact information on file with your student loan servicer is up to date. You can call your servicer or log in to the payment portal to check.
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Update 08/12/21: This article has been updated with new information.