The Coronavirus Stimulus Package and Student Loans
By Debra Gates
As a result of the devastating effects of the coronavirus on American citizens, Congressional lawmakers have responded by creating the Coronavirus Stimulus Package to offer some financial relief on strained budgets.
We at CAPTRUST would like to highlight one of the major advantages under the new legislation that is geared toward student loan borrowers. The Department of Education will suspend payments for any student loans issued by the federal government within the past 10 years without penalty or interest through September 30, 2020. For the sake of clarity, we have listed some of the more intricate details that we found noteworthy.
- Please be advised that it might be difficult to contact many of the loan service providers right now, so it is recommended that you wait a few weeks and, instead of calling them, access your online account. This two- to three-week window will give the service providers the time needed to recalibrate their billing systems to reflect “no payment due.” Also, within the coming weeks, student loan borrowers will automatically receive an official notice detailing the effects of the suspension on their loan(s).
- Although the payments have been suspended, a student loan borrower will still have the option of paying back his or her loans; however, any payments received during the six-month temporary suspension will go directly toward paying down the principal of the loan.
- This six-month suspension will have no effect or bearing on someone who is trying to qualify for the public service loan forgiveness program by making 120 monthly payments or any loan-rehabilitation programs.
- All wage garnishments that were the result of delinquent payments have also been suspended during this six-month period.
- If your employer repays some of your student loans, then between the date of the signing of the bill and the end of 2020, he or she can offer up to $5,250 of assistance without those funds being included as an employee’s income. If your employer offers a tuition reimbursement program, that money will also count toward the $5,250.
- If you have loans from private lenders or older loans, please check with the holders of those loans to determine whether they are offering any type of loan repayment suspension or assistance program independent of the Coronavirus Stimulus Package.
Have questions? Need help? Call the CAPTRUST Advice Desk at 800.967.9948 or schedule an appointment with a retirement counselor today.