A new executive order signed by President Trump is expected to give additional relief to student loan borrowers during the coronavirus (COVID-19) pandemic. It is important that all student loan borrowers be aware of what these changes entail and how they can affect their outstanding student loan balances.
At the start of the COVID-19 pandemic, Congress passed the CARES Act, a $2.2 trillion stimulus bill, that included relief effort for numerous aspects of the economy. The CARES Act paused all federal student loan payments and stopped interest from being incurred on federal student loans. Additionally, the stimulus bill put a stop to all federal student loan collection efforts. However, this bill was passed at the beginning of the pandemic with the thought that relief would no longer be needed through the end of 2020 with the hopes that the COVID-19 crisis would eventually be subsiding. Given the fact that numbers of positive cases are growing, and states are struggling to manage the crisis, it has quickly become clear that additional relief was needed. The original relief offered through the CARES Act was set to expire on September 30, 2020.
This most recent executive order suspends federal student loan payments through the remainder of 2020, expiring on December 31, 2020. Details on this executive order were spelled out in a memorandum titled “Continued Student Loan Payment Relief.” In this memorandum, the President ordered Secretary of Education, Betsy DeVos, to extend the CARES Act relief through December 31, 2020.
What this means for borrowers who owe on federal student loans is that their payments will continue to be paused until the end of the year. Additionally, interest will not be incurred on federal student loan debt. If, however, the borrower originally took on federal student loan debt only to have it consolidated later through a private entity, this relief does not extend to this debt. Many student loan lenders are more than willing to work with borrowers during this difficult time, but each borrower must reach out to his or her respective lender to obtain any assistance.
If borrowers are willing and able to continue making payments on their federal student loans, they can do so. In fact, this period is the perfect opportunity to make headway on paying down these debts since no interest will be incurring on them through the rest of the year.
It should be noted that the moratorium on student loan collection, as well as the counting of non-payments during this time towards public student loan forgiveness, were not mentioned in the memorandum or executive order despite the fact they were explicitly included in the original stimulus bill.
Currently, Congress is debating new potential stimulus packages that would offer relief like what was included in the CARES Act. While President Trump’s memorandum does not include measures to cover the student loan forgiveness program, Congress is seeking to measures on student loan forgiveness. However, currently, no end is in site for an agreement on a stimulus package.
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.