This story is developing.
President Donald Trump will suspend your federal student loan payments through December 31, 2020.
Here’s what you need to know.
Trump signed an executive order today that will grant additional student loan relief and provide a payroll tax cut, enhanced unemployment benefits and an eviction moratorium. Trump, who is seeking re-election, sent a memorandum today entitled “Continued Student Loan Payment Relief During the COVID-19 Pandemic” to U.S. Secretary of Education Betsy DeVos. Trump ordered DeVos to extend the student loan benefits contained in the Cares Act until December 31, 2020. Congress passed the Cares Act, which is the $2.2 trillion stimulus bill that Congress, in March: Among other benefits, the Cares Act:
- paused all payments for federal student loans;
- set interest rates at 0%, so interest will not accrue on your federal student loans;
- halted collection of federal student loan debt; and, among other benefits,
- “counted” non-payment of federal student loan debt toward the 120 required monthly payments for public service loan forgiveness.
The student loan relief included in the Cares Act followed Trump’s executive action earlier this year that provided similar student loan relief for 60 days prior to passage of the Cares Act. Without today’s executive order, this student loan relief was slated to expire on September 30, 2020. Trump wrote that student loan borrowers can continue to make federal student loan payments in the normal course. Trump also noted in the memorandum that many student loan borrowers have continued to make student loan payments over the past five months, despite the temporary pause, to pay off their student loans faster.
“Currently, many Americans remain unemployed due to the COVID-19 pandemic, and many more have accepted lower wages and reduced hours while States and localities continue to impose social distancing measures,” Trump wrote in the memorandum. “It is therefore appropriate to extend this policy until such time that the economy has stabilized, schools have re-opened, and the crisis brought on by the COVID-19 pandemic has subsided.”
Will I get student loan forgiveness?
Many student loan borrowers are wondering whether Trump’s executive order contains student loans forgiveness. Like the $1 trillion Heals Act that Senate Republicans proposed for the new stimulus package, Trump’s executive order does not include student loan forgiveness. While student loan forgiveness was not expected, borrowers have speculated what Trump’s executive order would mean for student loans during an unprecedented time of unemployment. House Democrats pushed for student loan forgiveness earlier this year in the Heroes Act, but the Republican-led Senate called the Heroes Act “dead on arrival.” Democrats such as Sen. Elizabeth Warren (D-MA) proposed student loan forgiveness for 95% of Americans, and Student Debt Crisis, a student loan advocacy non-profit, recently sent Warren a petition signed by 1.2 million people to cancel student loan debt. Among other student loan relief, 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 forgive all undergraduate tuition from two- and four-year public colleges and universities.
How to 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 still due. FFELP Loans and Perkins loans not owned by the federal government are also not included. Therefore, make sure you have a game plan to pay off student loans. What’s the best way to start? Start with these four options, all of which have no fees: