President Trump Suspends Student Loan Payments For 60 Days Without Interest
President Trump Makes it Official: Student
loan borrowers can suspend payments for 60 days without interest.
In an effort to help Americans who are financially affected by the Chinese coronavirus pandemic, President Trump announced last week that the federal government will waive interest on student and other federally held loans for at least 60 days.
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Education Secretary Betsy DeVos said in a press release:
“These are anxious times, particularly for students and families whose educations, careers, and lives have been disrupted … Right now, everyone should be focused on staying safe and healthy, not worrying about their student loan balance growing… I commend President Trump for his quick action on this issue, and I hope it provides meaningful help and peace of mind to those in need.”
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Business Insider also confirmed that student-loan borrowers will also be allowed to pause payment for up to 60 days without penalty. Interest rates will be set at 0% for the next 60 days as well. The forbearance period begins retroactively on March 13, 2020.
Should a borrower continue to make monthly payments on student loans, those payments will apply to the principal, “once all interest accrued prior to the president’s March 13 announcement is paid.”
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Borrowers still need to contact their loan servicer to request the suspension of payments. It is unclear how quickly these service providers will be able to respond and process these requests.
According to USA Today, “Those in the Public Service Loan Forgiveness program who have to make 120 payments before their loan is forgiven may also be interested in continuing to make payments.”
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Other pieces of legislation being considered to ease student loan debt liability include a plan by Senate Majority Leader Mitch McConnell that would pause payments for three months and allow Secretary DeVos to add another three months if needed.
Senate Democratic Leader Chuck Schumer (D-NY) and Senator Elizabeth Warren (D-MA) unveiled their own student loan payment and relief plan, which according to a press release on Warren’s website would:
“Provide much-needed relief to federal student loan borrowers through immediate cancellation of monthly student loan payments for the duration of the national emergency caused by the spread of the coronavirus, and a pay down of a minimum $10K for all federal student loan borrowers.”
Warren and Schumer’s new proposal would offer relief to borrowers “through targeted, sustained financial assistance for, at minimum, $10,000 in payments.” Another feature of the proposal is that the Department of Education would “institute a 90 day grace period” in which missed payments would not result in negative credit reporting or fees and penalties.
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Student loan borrowers are already struggling to pay back their loans, and the coronavirus outbreak will only compound the issue. According to USA Today graduates with a bachelor’s degree set a U.S. record with $29,200 in student loan debt.
Debbie Cochrane,
Executive Vice President of the Institute for College Access and Success, said:
“millions of students continue to struggle with their debts.”
While Democrats in the Senate have blocked all proposed bills to provide financial assistance to the American people, President Trump’s action offers immediate relief.
