The Department of Education (ED) announced that student loan borrowers’ federal loan payments will be automatically paused through December 2020, interest free, as a part of President Donald Trump’s recent executive order. Borrowers will continue to have the option to make payments if they choose to pay off their loans more quickly and at a lower cost.
Earlier this month, Trump signed an executive order that extended the suspension on interest accrual for federal student loans from March, as well as the forbearance period, through the end of the year. This order is meant more as a stopgap than a long-term fix, in an effort to bypass Congress and provide some short-term relief from the economic fallout caused by coronavirus.
During this time, collections on defaulted, federally-held loans will also remain halted for the calendar year. In addition, non-payments will count toward Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR) progress.
Some borrowers have already started receiving notices from services about payments resuming, however, according to the announcement, the FSA will work with student loan servicers to notify borrowers of this extension throughout the fall. Servicers are working to make these changes and borrowers should expect to see the extension reflected on their accounts over the next several weeks.
Sources:
ED: Secretary DeVos Fully Implements President Trump’s Presidential Memorandum Extending Student Loan Relief to Borrowers Through End of Year
NASFAA: ED Announces Trump’s Executive Order Extending Borrower Relief Will Be Automatic
NASFAA: Trump’s Executive Orders Come With Questions as Borrower Relief Will Soon Expire
Executive Order: Continued Student Loan Payment Relief During the COVID-19 Pandemic