- What you need to know about the moratorium
- What this means for income-driven repayment plans
- What steps you should take next
What You Need To Know About The Moratorium
Trumps’ executive memorandums from August 8th included the deferring of student loan payments and interest on payments until 2021. Additionally, the order suggested against the garnishment of wages and proposed that all deferred payments should still count toward requirements for Public Service Loan Forgiveness (PSLF). U.S. Secretary of Education, Betsy DeVos, officially implemented the extension of the student loan moratorium later that month. The pause provides a bit of hope for struggling federal loan borrowers in our troubling post-COVID-19 economy.
What This Means For Income-Driven Repayment Plans
Borrowers who work full-time for qualifying employers will still have all non-payments during the loan suspension period counted towards those required for forgiveness under some income-driven repayment plans.
Additionally, the Education Department has confirmed that income-based repayment borrowers will not need to recertify income before December 31, 2020. According to the website: “As part of the administrative forbearance, your recertification date has been pushed out from your original recertification date. You will be notified of your new recertification date before it is time to recertify.”
All borrowers have the option to continue paying off loans at full price or via partial payments, should they choose to do so.
Lastly, if you are not currently enrolled in an income-based repayment plan, you can apply at any time. Those looking to apply now, during the administrative forbearance, are entitled to the same benefits as pre-existing borrowers.
What Steps You Should Take Next
There is no immediate action required for borrowers with any federally-held student loans. All payments and interest rates have been automatically suspended. While loan forgiveness remains an unsolved issue, there are ways for borrowers to take advantage of the pause until payments recommence in 2021.
- Look into alternative repayment plans (such as income-driven repayment plans, if not already enrolled in one)
- Consider alternative loan forgiveness options (such as PSLF)
- Reassess your current funds and refinance student loans
Visit the Federal Student Aid website for a full list of loan FAQs and to see what income-driven repayment plan works best for you. Questions? Give us a call at 516-541-6549 or visit our DSJCPA COVID-19 Information Center to stay current.
Associate, Creative Solutions
516-541-6549 | Email