If you have federal student loans, you’re probably wondering, will the government extend the grace period because of coronavirus?
Although there isn’t an answer to that question yet, we’ll explore what we do know about extending coronavirus student loan relief measures below. And, at the end, we’ll walk you through some steps you can take if relief measures get extended or if they don’t.
Is There Any Talk of Extending COVID-19 Student Loan Relief Measures?
There has been talk of extending COVID-19 student loan relief measures and talk of not extending them, but nothing is official. Either the President will need to issue another memorandum to extend relief measures or Congress will have to pass a bill that address the issue.
Here’s what we know from the stimulus bills that are currently out there:
The U.S. House of Representatives passed the HEROES Act in May 2020. The bill included $10,000 in federal student loan forgiveness, $10,000 in private student loan forgiveness, and an extension of the CARES Act student loan relief measures through September 2021. It would also make all commercially held FFEL and Perkins loans eligible. Although it passed the House, this bill hasn’t been voted on in the Senate (it’s unlikely it ever will be).
On July 27, 2020, the Republican-led Senate introduced several bills that collectively make up the Health, Economic, Assistance, Liability, and Schools (HEALS) Act. The HEALS Act did not propose extending student loan relief measures past the original September 30 deadline established in the CARES Act. The bill is unlikely to pass in its current state.
Updated HEROES Act
On September 28, 2020, the House unveiled an updated version of their original HEROES Act. The Updated Heroes Act would extend administrative forbearance through September 30, 2021. Interest rates would remain at 0% until September 30, 2021, or “until the economy shows initial signs of recovery.”
It would also expand loan relief to include commercially-held FFEL Program loans, Perkins Loans, and HHS student loans. The ED would make monthly interest payments on qualifying commercially-held loans, which aren’t eligible for the 0% interest rate.
This bill is unlikely to pass in its current state.
Trump Administration Stimulus Proposal
On October 9, 2020, the Trump Administration revealed a $1.8 billion stimulus proposal that would include $25 billion for student loan forgiveness. There aren’t details yet as to where that money would go or who it would help. There’s no mention of extending the relief measures. The proposal is facing opposition from Republicans and Democrats in Congress, so it’s unlikely to pass in its current state.
Timeline of Coronavirus Student Loan Relief Measures
Looking at the timeline can help us see how quickly measures were enacted and extended. That way, we know when we might expect another extension.
March 20, 2020: The Department of Education suspended loan payments, stopped collections on defaulted loans, and set interest rates to 0% for 60 days retroactive to March 13, 2020.
March 25, 2020: The CARES Act extended those relief measures through September 30, 2020.
August 8, 2020: President Trump issued a memorandum extending the relief measures through December 31, 2020.
Trump announced the extension 53 days before the relief measures would have expired. Using that timeline, we might expect another announcement regarding an extension around November 8, 2020.
With the election coming up on November 3, President Trump may choose to act sooner since borrowers across party lines owe a collective $1.54 trillion in student debt.
Will the Election Affect What Happens with the COVID-19 Student Loan Relief Measures?
Student debt and the coronavirus are two major crises in America. So, the election will play a huge role in determining what will happen with COVID-19 student loan relief measures.
What if Biden is Elected?
Although not mentioned on his campaign website, Biden would likely extend coronavirus student loan relief measures. We know from his student loan campaign platform that he wants to lower student loan payments and cancel student debt for certain borrowers, so extending CARES Act relief measures would fall in line with that.
Biden’s campaign website also mentions that Biden supports offering $10,000 in coronavirus student loan forgiveness to all borrowers with qualifying federal student loans.
Read our coverage of Biden’s student loan platform here.
What if Trump is Reelected?
President Trump’s campaign website does not outline a plan for combatting student debt. The Trump Administration’s stimulus proposal does not include an extension of student loan relief measures either. President Trump did state that he would veto the HEROES Act if it passed through Congress, which is the only stimulus bill on the table that would extend relief measures.
Even so, Trump did extend student loan relief measures once before, so he may do it again.
What about Congressional Elections?
Based on the stimulus bills proposed thus far, we can hypothesize this about the role congressional elections will play:
- If Democrats control Congress, it’s likely that an act extending student loan relief measures will pass
- If Republicans control Congress, it’s not likely that an act extending student loan relief measures will pass
- If each party maintains control of one part, it’s hard to say what will happen. We could continue to see an impasse with stimulus relief bills like we’ve seen this summer with a second stimulus bill, or we could see compromises made as we did with the CARES Act.
In all scenarios, it also depends on who wins the presidency. The Vice President votes in the Senate in the case of a tie, and the President can veto.
So, Will the Government Extend The Grace Period Because of Coronavirus?
We can’t say with any certainty what will happen with COVID-19 student loan relief measures. With the strong partisan divide in Congress, the upcoming election, and the ongoing pandemic, it’s hard to predict what will happen and when.
However, if you’ve been affected financially by the coronavirus, there are steps you can take now to manage your student loans better. Although we’ve broken them into two different sections, you can get started with any of these steps now.
What to Do If Relief Measures are Going to Be Extended
Enroll in an Income-Driven Repayment Plan
Why would you enroll in an income-driven repayment (IDR) plan when payments aren’t even due?
You’d do it to get yourself closer to loan forgiveness. An income-driven repayment plan bases your monthly payment on your income and offers loan forgiveness after a set number of years of on-time payments. The months of suspended payment during the coronavirus count toward that forgiveness.
Apply for an IDR at StudentAid.gov.
Pay Off Other High-Interest Loans and Debt First
If you can, use the money you would normally spend on your federal student loans each month to make extra payments on the debt with the highest interest rates. This might be your private student loans, credit card debt, personal loans, a car loan, etc. This strategy keeps your monthly budget the same while lowering your most expensive debts.
Consolidate Your Perkins or FFEL Loans
Talk to your loan servicer about consolidating your Perkins Loans or FFEL Program Loans in a Direct Consolidation loan. That would make those loans eligible for the CARES Act relief measures. Just know that by consolidating, you might end up with a slightly higher interest rate than you have now. Plus, any outstanding interest would capitalize.
What to Do If Relief Measures are Not Going to Be Extended
Enroll in an Income-Driven Repayment Plan
Apply for an income-driven repayment (IDR) plan now so that you’re enrolled and know what you’ll owe each month when federal student loan payments resume. Review the different federal student loan repayment plans. Then, fill out an online application. If you have questions about your options, reach out to your loan servicer.
Recertify Your Income
Already enrolled in an IDR? If you’ve lost income from COVID-19, recertify your information. Doing so will update your enrollment and potentially lower what you’ll owe each month when payments resume. Reach out to your loan servicer to recertify.
Refinance Your Private Student Loans
Interest rates for private student loans are low, making it a great time to refinance your private student debt. Refinancing could lower your monthly student loan payments, making it easier to manage your private and federal student loan payments when the payment suspension ends. Learn more about refinancing here.
The refinancing lenders we partner with have excellent rates, flexible loan terms, autopay discounts, and borrower protections like death and disability discharge, military deferment, unemployment forbearance, and more.
Read more about how the coronavirus affects student loans:
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“College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply. (1)College Ave Refi Education loans are not currently available to residents of Maine. (2)The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. (3)$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. (4)This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary. Information advertised valid as of 12/14/2020. Variable interest rates may increase after consummation.”
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.