President Trump announced on Friday that the government was temporarily waiving interest on all federally held student loans in light of the coronavirus pandemic. Officials said the move would offer relief to tens of millions of borrowers.
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“That’s a big thing,” Trump said. “That should make students really happy.”
For student loan borrowers, that means interest rates will be set to 0 percent for at least 60 days, and that could potentially be extended longer, according to the president. Borrowers will also be able to suspend their payments for at least two months.
Education Secretary Betsy DeVos said in a news release that she had directed all federal student loan servicers to grant an administrative forbearance to any borrower with a federally held loan who requests one.
To request a forbearance, DeVos said borrowers should call their loan servicers.
“We’ve given them very strong instructions,” Trump said of the loan servicers.
DeVos also authorized automatic payment suspensions for borrowers who are more than 31 days delinquent as of March 13 or who hit 31 days’ delinquency.
Anyone who’s hoping to qualify for Public Service Loan Forgiveness won’t be able to count the months with forbearance toward PSLF, but payments for that program don’t need to be consecutive, so borrowers won’t lose credit for previous payments, officials said.
For borrowers who continue making payments during the 60-day period, the payments will go toward interest accrued through March 13 before going toward the principal amount owed.
It’s important to note that the government direction only applies to federally held loans. Any borrowers with private student loans will still need to make payments as usual, unless their private loan holder opts to offer a similar policy.
For borrowers who have seen a drop in income as a result of the epidemic, the Department of Education recommended contacting the loan servicer to discuss lowering monthly payments.