The recently passed $2.2 trillion stimulus bill provides several different forms of financial assistance for American consumers during the current coronavirus (COVID-19) crisis. The new bill also provides options for student loan borrowers who are struggling to keep up on their loan payments, which comes as good news for the over 44 million borrowers holding more than $1.5 trillion in outstanding student loan debt.
Borrowers who have federally owned student loans will not have to pay on their loans through at least September 30, including Parent PLUS Loans. This payment suspension will occur automatically and does not need to be requested by the borrower.
Additionally, student loan interest on these federal loans will be suspended until September 30, which means borrowers who do not make payments on their loans during this six-month period will not incur interest. All federal student loans will have a zero percent interest rate for at least 60 days from March 13, 2020.
Borrowers who are paying and are on track through a forgiveness program will be able to suspend their payments during these six months without losing any progress made during this time.
For borrowers who are worried that forbearing their loan payments will reflect negatively on their credit reports, the stimulus bill ensures that this will not happen. In fact, credit reporting agencies will view these suspended payments in the same manner as regularly made payments.
Some borrowers are fortunate enough to receive loan payments by their employers. For these borrowers, their employers will be able to make their student loan payments tax-free through January 1, 2021, for up to $5,250 annually.
Lastly, debt collection on student loans for borrowers who have already defaulted on their loans will be suspended during this time. Wages will also not be garnished, and the borrower’s tax refund will not be reduced to make up for their past-due amounts. The federal government will be returning an estimated $1.8 billion in tax refunds to approximately 830,000 borrowers who have defaulted on their loans and gone through debt collection since the COVID-19 national emergency was officially declared.
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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.