President Donald Trump (Photo by Chip Somodevilla / Getty Images)
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President Donald Trump will suspend your payments for federal student loans through December 31, 2020.
Here’s what you need to know.
Student loans
Trump today signed an executive order that will provide additional relief for student loans and provide tax cuts, improved unemployment benefits and an eviction moratorium. Trump, who is running for office, sent a memorandum entitled “Continuing Student Loans During the COVID-19 Pandemic” to US Secretary of Education Betsy DeVos. Trump instructed DeVos to extend the benefits of student loans under the Cares Act until 31 December 2020. Congress approved the Cares Act, which is the $ 2.2 trillion incentive bill that Congress passed in March: Among other benefits, the Cares Act:
- break all payments for federal student loans;
- set the interest rates at 0% so that interest rates will not accrue on your federal student loans;
- stopped collection of federal student loan debt; and, among other benefits,
- “Counted” non-payment of federal student loan debt to the 120 required monthly forgiveness payments for public service.
The relief of student loans included in the Cares Act followed Trump’s executive action earlier this year that provided 60 days of comparable student loans prior to the passage of the Cares Act. Without current executive order, this relief of student loans was deemed to expire on September 30, 2020. Trump wrote that lenders for student loans can continue to pay federal student loans in the normal course. Trump also noted in the memorandum that many student loans have continued to make student loan payments over the past five months, despite the temporary hiatus, to pay off their student loans faster.
“Currently, many Americans remain unemployed because of the COVID-19 pandemic, and many more have accepted lower wages and reduced hours while states and locations continue to pursue social distancing measures,” Trump wrote in the memorandum. “It is therefore appropriate to extend this policy until a time when the economy has stabilized, schools have reopened, and the crisis brought about by the COVID-19 pandemic has subsided.”
Will I be forgiven for student loans?
Many student loans question whether the executive order of Trump student loans contains forgiveness. Like the $ 1 trillion Heals Act proposed by Republicans in the House of Representatives for the new incentive package, Trump’s executive mandate does not include forgiveness for student loans. While student loan forgiveness was not expected, lenders have speculated what Trump’s executive mandate would mean for student loans in an unusual time of unemployment. House Democrats earlier this year called for forgiveness of student loans in the Heroes Act, but the Republican-led Senate called the Heroes Act “death upon arrival.” Democrats like sen. Elizabeth Warren (D-MA) proposed forgiveness of student loans for 95% of Americans, and Student Debt Crisis, a nonprofit for student loans, Warren recently sent a petition signed by 1.2 million people to cancel student loan debt. Among other relief loans, former Vice President Joe Biden proposed a Covid-19 student loan forgiveness plan to cancel up to $ 10,000 in student loan debt for each borrower and forget all undergraduate lessons from two- and four-year public colleges and universities.
How can you pay off student loans?
Even if your student loans are paused, you will still owe student loan payments when the executive order ends. Plus, private student loans are not paused and are yet to be repaid. FFELP loans and Perkins loans not owned by the federal government are also not included. So make sure you have a game plan to pay off student loans. What is the best way to get started? Start with these four options, all of which have no fees:
Sources: Student loans
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