COVID-19 & Your Student Loans

We hosted a Return to Repayment webinar on July 31. You can watch the recording (will be added when we complete captioning) or view the Google Slides to learn more about how to prepare for October.

Federal student loan borrowers haven’t made payments or had interest accruing in over three years. Finally, the payment and interest pause is coming to an end later this year. In June 2023, the Department of Education clarified that interest on federal student loans will resume accrual in September and payments will resume in October.

To prepare for the resumption of payments, follow these steps:

• Log into studentaid.gov to take an accounting of your loans and review your loan servicer.
• Log into your loan servicer’s account, update your contact information, and reauthorize or set up autopayments.
• Review your payment details and plan. If you’re planning on LRAP and/or PSLF, make sure you’re enrolled in an Income-Driven Repayment plan (see more details below).
• If you need LRAP support, you should apply in August or September. We’ll update you with more details as we learn more about the resumption of repayment.

Some best practices include:

• Make sure you’re taking action early and not waiting until the last minute. You could miss a payment or end up in an unaffordable payment plan.
• Review your budget and prepare for an increase in expenses now.
• Getting ahold of your loan servicer can be challenging right now. Be patient; you may need to call multiple times or use the live chat feature. If you need to get ahold of your servicer, set aside some time to account for long holds.
• Keep documentation of your payment plan, payments, PSLF and IDR applications, and correspondence with your servicer.

Federal student loan payments have been paused since March 13, 2020, and interest rates have been set at 0%. The Administration has extended the pause again, with payments set to resume sometime in 2023. Payments will resume 60 days after the Department is permitted to implement the program or the litigation is resolved, which will give the Supreme Court an opportunity to resolve the case during its current Term. If the program has not been implemented and the litigation has not been resolved by June 30, 2023, payments will resume 60 days after that.

As has been the case since March 2020, the pause is automatic and non-payments qualify for PSLF so long as you’re working full-time at a 501(c)(3) nonprofit or in government. Borrowers do not need to recertify their IDR plans during the COVID payment pause, and the earliest borrowers will be asked to recertify is 6 months after the payment pause ends. Therefore, there’s no need for you to take any action, unless you’re entering an IDR plan for the first time, changing the type of repayment plan you’re in, or need to reduce your monthly payment amount.

Details about the pause and next steps will continue to come from the Department of Education. As always, you should check studentaid.gov for the latest announcements.

On March 27, 2020, Congress passed a COVID-19 relief package called the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act includes relief for federal student loan borrowers, primarily in the form of suspended payments and interest accrual on federal Direct and FFEL loans held by the Department of Education.

Significantly, these months will count as qualifying payments for Public Service Loan Forgiveness so long as you’re working full-time for a PSLF-qualifying employer. Similarly, payments will count toward time-based IDR forgiveness (the 20-25 year forgiveness plans automatically built in to all income-driven repayment plans). Suspended payments will also be reported to credit agencies as regularly scheduled payments, and therefore should not affect your credit score.

The payment suspension is automatic. All borrowers of federally-held direct and FFEL student loans have been automatically placed on what the Department of Education is calling an “administrative forbearance,” which will suspend payments during this time period. Because the change are automatic, autopay will be suspended. If you have made or will make any payments after March 13, 2020 contact your loan servicer if you want a refund.

Both the Trump & Biden administrations extended this relief multiple times. Relief currently lasts from March 13, 2020 through sometime in 2023 (either 60 days after student debt cancellation is implemented or 60 days after 6/30/23, whichever comes first).

If you’d like, you can make payments during the payment pause, but you must take action. You may not be financially impacted by COVID-19, you may be trying to pay your loans off, or you may want to take advantage of the 0% interest rate to lower your loan balance. Whatever the reason, there is the option to continue making payments. To make a payment, you will either need to 1) opt out of the payment suspension (if you want to continue auto-pay), or 2) log on to your loan servicer’s website and make manual payments.

However, if you plan to pursue PSLF, make sure you do not get put on a paid-ahead status by paying more than what’s due. To do so, you should either manually select that you do not want to be put into paid ahead status or advance your due date, opt-out of the suspension, or contact your loan servicer to permanently remove paid ahead status. If you are in a paid ahead status, your payments may not count as qualifying payments for PSLF. There have been some recent updates to this policy, but if you made payments before August 2020, it is better to be cautious and ensure your loans are in the correct status.

Many of you are wondering whether you need to update your income for your IDR plan. The short answer is no!

From March 13, 2020 through the end of the pause, all federal student loans (for current students and those in repayment) will have a 0% interest rate. Your loans won’t be accruing interest during this time period. Any payments you make will go toward the principal balance of your loans, 0nce all the interest that accrued prior to March 13, 2020 is paid. This change is automatic—there is no need for you to do anything.

If your income has been affected by COVID-19 and you have private student loans or institutional loans (e.g. refinanced loans, bar study loans, Perkins loans, etc.), please reach out to your lender directly to discuss your options. Some lenders are providing forbearances, interest rate reductions, and extended payment timelines to borrowers who submit a request.

If you have an LRAP loan due back to the University, a Perkins loan held by the University of California, or a Bar Study loan, the UC System has implemented some changes to mirror the COVID payment pause as much as possible. All late fees and interest will be waived from April 15, 2020 – June 30, 2023. You can request an administrative forbearance so that no payments will be due through at least June 30, 2023. Administrative forbearances will automatically be applied to past due accounts. If you are not able to make payments, please contact Heartland ECSI to request a forbearance or deferment, or use this form.

If you have a defaulted federal student loan (federally-held Direct or FFEL loans), the Department of Education has stopped requests to withhold wages, tax refunds, and Social Security benefits, effective March 13, 2020. The DOE has also instructed private collections agencies to stop reaching out to borrowers. If you have a loan in delinquent or default status, please reach out to us for assistance.

MOHELA will credit time spent in the COVID payment pause toward PSLF so long as you were working full-time for a PSLF-qualifying employer. 

Make sure to submit a new PSLF Form to certify your employment and payments annually and each time you leave a job. This will ensure you’ve gotten proper credit for all your payments or non-payments while the pause was in place.

On October 6, 2021, the Department of Education announced new improvements to the Public Service Loan Forgiveness program to restore the promise of PSLF. The temporary PSLF waiver was in place until October 31, 2022. The waiver allows borrowers to receive PSLF credit for all payments made while working full-time for a PSLF-qualifying employer, regardless of federal loan type or payment plan. This includes loan types and repayment plans that were previously not eligible for PSLF, and payments that were late or not made in the full amount due.

In October 2022, the Department of Education has issued new guidance for how it’ll handle PSLF between the waiver expiring (10/31/22) and new regulations going into effect (7/1/23). Borrowers will be able to receive credit for all past periods of repayment status, months prior to consolidation, months spent in deferment prior to 2013, and 12+ months of consecutive forbearance and/or 36+ months of cumulative forbearance.

On November 1, 2022, the Department of Education announced new regulations governing the Direct Loan program and PSLF that will go into effect on July 1, 2023. Review our News & Updates page for more information.

You might be eligible for stimulus or economic impact checks from state or federal governments. The amount and your eligibility depends on your tax filings. The amount you receive will not be considered taxable income, and will not be considered income for LRAP purposes. Please do not include these stimulus check as income in your LRAP applications for funding or forgiveness.

Your loans may have changed servicers during the payment pause. FedLoan Servicing, Granite State Management & Resources, and Navient all stopped servicing federal loans in 2022. If your loans were managed by one of these servicers, you are likely with a new servicer now. You can check your loan servicer on studentaid.gov.

There has been in increase in student loan scams since the COVID-19 and student loan relief announcements. Be aware of scammers and know that the federal government will never call to ask for a fee to suspend your loan payments. Report any scams to the FTC or the California Department of Financial Protection and Innovation.