No Federal Student Loan Payments through January

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The pandemic’s federal student loan forbearance period which was expiring at the end of December has been extended through January 31, 2021.

On Friday, December 4, the Department of Education extended a forbearance period that was expiring on December 31, 2020. Its press release says “[f]ederal student loan borrowers will not be expected to make payments through January of next year. . .  .”

What Relief Does This Include?

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act of last March included significant relief for federal student loan borrowers. Section 3513 of CARES. But that relief expired after September 30, 2020. So a few days before that expiration, the Department of Education extended that relief through December 31, 2020. Now this period of relief extends through January 31, 2021.

So does this short additional extension cover? The December 4, 2020 press release referred to an “extension of the federal student loan administrative forbearance period, the pause in interest accrual, and the suspension of collections activity through January 31, 2021.” Also, “[n]on-payments will continue to count toward the number of payments required under an income-driven repayment plan, a loan rehabilitation agreement, or the Public Service Loan Forgiveness program.”

For most borrowers, that’s what you need to know. You don’t have to pay, interest isn’t accruing, and no collection can happen. Also, during these forbearance months these non-payments count for the 3 purposes listed.

If You Need to be More Precise…

Beyond this limited list, the press release said more broadly that “the current relief measures will continue until the end of January.” So what precisely are those “current relief measures”? They are whatever was in the CARES Act, since that’s what the Department of Education had extended from the Act’s deadline of September 30 to the previous deadline of December 31, 2020.

So what did the CARES Act cover? See our blog post of April 20, 2020 detailing this.

It boils down to the following benefits for federal student loans (some of which overlap with the list in the new press release):

  1. Suspension of all loan payments through September 30, 2020 (now extended through January 31, 2021).
  2. Waiver of all interest during this time.
  3. Suspension of all involuntary collection during this time.
  4. Each non-payment treated as if the borrower had made the payment, for credit reporting purposes.
  5. Same thing for loan forgiveness and loan rehabilitation purposes.

The Kinds of Federal Student Loans NOT Covered

The CARES Act, and the two extensions granted by the Department of Education, apply only to FEDERAL student loans. They do not apply to PRIVATE student loans. None of the relief mentioned her applies to private student loans.

There are also a few relatively small subsets of federal student loans this extension does not cover. Again, see our earlier blog post about the CARES Act about this. Or else talk with your student loan servicer or your Louisville bankruptcy lawyer.