The FTCC Financial Aid Department has important news for student loan borrowers. Our office is committed to providing financial literacy and student loan repayment information to our students and the community.
Student loan repayment relief began on March 20 when the Secretary of Education announced that all federal student loans should have a 0% interest rate for the following 60 days, that collections activity on defaulted loans should cease, and that monthly payments on loans should not be required.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was enacted on March 27, extended these student loan assistance provisions from March 13 to Sept. 30.
Currently, these three relief benefits are scheduled to end on Dec. 31 after they were extended by President Donald Trump on Aug. 8.
Student loan borrowers may receive another extension on these relief provisions, but they should be prepared to resume payments in January 2021, as the COVID-19 forbearance will expire at the end of 2020, as of the time of the writing of this article.
What do these relief provisions mean for borrowers? While monthly payments have not been required and interest has not accrued on federal student loans, borrowers are still able to make voluntary payments. This time period is a wonderful opportunity to reduce the principle owed on student loans. If a borrower is participating in an income-based repayment plan and working toward making the number of requirement payments for student loan forgiveness, the suspended payments are included in the total payments needed. This benefit from the CARES Act enables borrowers to continue to make progress toward loan forgiveness during the time of payment suspension.
Those borrowers who should have renewed their income information for an income-based repayment plan between March 13 and Dec. 31 will not be required to recertify income information during this timeframe and will receive correspondence from their servicer about income recertification at some point after the COVID-19 forbearance has ended.
For borrowers with defaulted student loans in collections, this has been a time of relief from collections activity. However, if the student loan repayment provisions expire, collections activity will resume.
Borrowers with defaulted federal student loans should reach out to their guarantor or the Department of Education’s Default Resolution Group at 1-800-621-3115 in order to begin student loan rehabilitation to bring the loans back into good standing.
As a reminder, the Department of Education and federal student loan servicers will never charge a fee for repayment counseling or to receive these relief benefits from the CARES Act. Any organization that attempts to offer loan repayment assistance for a fee is likely to be promoting a scam. Please reach out to your federal student loan servicer for free assistance.
If you are unsure of the name of your federal loan servicer or how to contact them, visit https://studentaid.gov and log in to view your repayment information. FTCC reminds you to be an informed borrower and make the most of the student loan repayment relief during this challenging time.
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