There has been some confusion as to what affect the CARES Act has on Federal student loans. Prior to the CARES Act, the president announced a 60-day waiver of student loan interest and suspension of student loan payments and garnishments. The CARES Act expands on those provisions. Here are the facts:

  1. There is NO direct (see #3 for clarification) forgiveness of federal student loans.  Both sides of the aisle originally proposed some but it was not part of the final package.
  2. What is included in the act are the following automatic benefits:
    • No student loan payments until September 30, 2020
    • No accrued interest on student loan balances from now until September 30, 2020
    • No garnishments of wages, Social Security and tax refunds for student loan debt collection until September 30, 2020.
  3. For those who are currently part of Public Service Loan Forgiveness, there is a possibility of some debt forgiveness.  Public Service Loan Forgiveness is a program for those graduates that chose to dedicate themselves to working for the public’s benefit, i.e. federal or state government agency, at a qualified non-profit or in certain fields. 
    • One of the qualifications of this program is the payment of full, on-time payments towards your existing loans for a total of 120 payments.  At the end of 10 years, the balance on these loans is forgiven.
    • Any payments unpaid between now and September 30, 2020, will be considered paid towards the fulfillment of this requirement.
    • The forbearance of these payments will not affect the payment requirement.
    • This will result in a larger percentage of the loans being forgiven at the end of 10 years.