Congress recently passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which provides an array of monetary assistance. The consequences of job and income loss can feel infinite, impacting many aspects of daily life, including student loan payments.
How exactly does the CARES Act impact your student loans, and what’s the best way to proceed? Our video explains how you can automatically take advantage of a six-month relief in federal student loan payments, as well as how to navigate loan forgiveness, specifically Public Service Loan Forgiveness. Dan Routh, CFP®, financial advisor at Old Peak, helps you understand how the CARES Act impacts your student loans:
To learn more about federal student loan relief and how to manage your payments, feel free to contact us. We’re happy to offer you guidance on your specific situation with student loans, loan relief, and loan forgiveness.
Are Your Student Loans Eligible For Relief Under The CARES Act?
Hi, my name is Dan Routh. I'm a Certified Financial Planner Professional with Old Peak Finance. Old Peak provides comprehensive financial planning to busy professionals and business owners.
In this brief video, I'm going to describe the changes to federal student loans under the recently passed Cares Act. On March 27th, Congress passed CARES Act, a $2 trillion stimulus package meant to curb the effects of the coronavirus on the economy.
One of the key aspects of the law was temporary relief to federal student loan payers in the form of zero percent interest rates and automatic forbearance, or better known as payment relief, for the next six months.
These changes go into effect as of March 13th through September 30th and will be automatic, meaning you do not have to contact your federal loan servicer to have these changes made to your account.
This guidance is different from what was initially announced by the Department of Education.
So it may take time for your loan servicer to catch up. By visiting their websites, your servicer will likely have a notice posted about the changes and that they're working as quickly as possible to update the site.
One really important point that we've already had some questions on, is regarding loan forgiveness, especially those going for Public Service Loan Forgiveness or PSLF. As a quick reminder, to qualify for public service loan forgiveness, you must be on an income-driven repayment plan, work for a government agency or nonprofit, and make 120 qualifying monthly payments towards your loans or 10 years worth of payments.
The key point with a relief package is that the six month of suspended payments will count as qualifying payments towards loan forgiveness, so the forbearance or suspended payments paired with zero percent interest rates. There is no incentive to continue paying toward your student loans during this period if you are working towards federal loan forgiveness.
For private loans, each company is handling the coronavirus effects differently. So if your job or your income has been impacted, you should contact them directly to see what options you have before you stop paying.
For more information about student loans and how we advise our clients on this subject, please feel free to reach out or visit us at oldpeakfinance.com
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