A lot has been said about Covid-19 student loan relief. Students have questions about whether or not they qualify for debt relief and if so, under what conditions. What does The CARES Act cover? Does it only cover federal loans? How about my private student loans? If you are a student of any age with federal loans, you qualify for loan forgiveness or forbearance. Representatives at the US Department of Education can answer any questions and explain the fine points of debt relief under the CARES Act. Know that some relief currently offered may expire after January 2022. Private student loans and loans not secured by the Department of Education are ineligible for coverage under the CARES Act.
The CARES Act – What It Does
- Forgives or delays payments on most federal student loans (FEEL, Stafford, Perkins) between March 13, 2020, and Jan. 31, 2022.
- Changes interest rates to zero during that period.
- The zero percent interest rate and suspension of payments (technically called an “administrative forbearance”) are automatic and valid through the end of January 2022.
Loans That Receive the Zero Interest Rate
- Direct Loans (defaulted and non-defaulted)
- Some Federal Perkins Loans
- Some Federal Family Education Loans (FFEL) (defaulted and non-defaulted)
The zero-percent loan rate also applies to Direct Consolidation Loans and loans taken on by parents. Call the US Department of Education with questions regarding loan relief.
Loans Not Covered Under The CARES Act
Some FFEL loans owned by commercial lenders and some Perkins Loans owned by the schools do not fall under the protection of The CARES Act. A list of student loan servicers covered is posted on the Department of Education website. FYI: your servicer is the company to which you send your payments.
Private Loans
Certain types of relief may be available from private lenders.
- Lower interest rates
- Paused payments for up to 12 months
- Short term forbearance or deferment policies
- Waiver or refunding of late fees
Call Hoverson Law
Hoverson Law has been helping clients sort out financial problems for 30 years. If you live in Minnesota and have questions about your loan rights under Covid 19 debt relief, we are here to answer them. Call us now at (612) 349-2728.
