President Donald Trump’s executive order could have a big impact on your student loans.

Here’s what you need to know – what it means for your student loans.

Student loans

In a memorandum to U.S. Education Secretary Betsy DeVos, Trump ordered DeVos to extend several student loan benefits until December 31, 2020. The student loan relief follows similar student loan relief contained in the Cares Act (the $ 2.2 trillion stimulus package that Congress passed in March), which followed Trump’s executive action. earlier this year that provided similar student loan relief for 60 days before the passage of the Cares Act. “Currently, many Americans remain unemployed due to the COVID-19 pandemic, and many more have accepted lower wages and reduced hours as states and communities continue to impose social distancing measures “Trump wrote in the memorandum. “It is therefore appropriate to extend this policy until the economy has stabilized, schools have reopened and the crisis caused by the COVID-19 pandemic has subsided. “

Let’s dive in to understand what this means for your student loans.

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Suspend student loan payments

Under Trump’s executive action, your federal student loans will be suspended until December 31, 2020. This means that you will not need to make any payments until January 1, 2021. Without this extension, your payments of Federal student loans reportedly resumed on Oct. 1. 2020. Why? Congress passed the Cares Act, which offered multiple benefits for student loans, including a break in student loan payments. If you want to pay off your student loans faster, you can still pay off your federal student loans during this time. Trump wrote in the memorandum that many student loan borrowers have continued to make student loan repayments since March, despite the temporary hiatus, to pay off their student loans faster.

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Interest won’t accumulate on your student loans

Until December 31, 2020, no interest will accrue on your federal student loans. Most importantly, it doesn’t change your interest rate. Rather, it means that during this period, no new interest will accrue on your federal student loan balance.

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What about the forgiveness of civil service loans?

Under the Cares Act, if you did not make payments while student loan payments were suspended, any non-payment of federal student loan debt “counted” toward the 120 monthly payments required for cancellation. public service loans. Likewise, the Cares Act also halted the collection of federal student loan debts. Trump’s memorandum specifically refers to “continuing the temporary suspension of payments and waiving all interest on student loans held by the Department of Education.” However, while it is possible that these additional benefits will also continue, Trump’s memorandum does not not specifically refer to the collection of student loan debts or the accounting for non-payments for civil service loan cancellation, both of which were included in student loan relief in the Cares Act.

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Is student loan cancellation included?

In the wake of Covid-19, in particular, many student loan borrowers have asked if their student loan debt will be canceled. The answer is: Trump’s decree does not include student loan discount. Like the Cares Act and the Heals Act, the $ 1,000 billion stimulus package proposed by Senate Republicans, the Executive Order will not cancel your student loans. House Democrats proposed $ 10,000 student loan cancellation just for financially troubled borrowers, but the Senate failed to pass the Heroes Act.

There have been several legislative and policy proposals to cancel student loans. For example, like Senator Bernie Sanders (I-VT), Senator Elizabeth Warren (D-MA) proposed the cancellation of the student loan during her presidential campaign, and Student Debt Crisis, a non-profit advocacy organization. student loans, recently petitioned Warren. signed by 1.2 million people to cancel student loan debt. Former Vice President Joe Biden proposed a Covid-19 student loan forgiveness plan to write off up to $ 10,000 in student loan debt for each borrower and remove all college and university undergraduate tuition fees two and four year olds.

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Does this apply to all federal student loans?

No, the decree only applies to federal student loans held by the federal government. For example, this includes direct loans such as Stafford loans. However, most FFELP loans and Perkins loans are not owned by the federal government. Therefore, if you have any of these student loans that are not owned by the US Department of Education, you will not get these student loan benefits and need to make student loan payments in the normal course. Likewise, if you have private student loans, payments would be due in the ordinary course. You can contact your student loan manager if you are unsure of the types of student loans you have.

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How to repay student loans

What happens to my student loan balance? Remember this: Even if your student loans are suspended, you will still have to repay your student loan at the end of the decree. This is important because your balance will not disappear as a result of this extension. Therefore, make sure you have a game plan for paying off student loans. What’s the best way to start? Start with these four options, all free:

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Resources: Student loans

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