Currently, employers can provide tax-free tuition assistance, which allows their employees to receive up to $5,250 per year toward qualified education expenses as a benefit. The CARES Act allows employers to use the $5,250 toward each employee’s student loans, tax-free to the employee through the end of 2020. If your employer offers this benefit, you may want to ask about the benefit for your student loan.
The CARES Act has suspended payments due and interest accrual (retroactive to March 13, 2020) through Sept. 30, 2020 for student loans held by the Department of Education, including most federal loans. The Act excludes Perkins Loans owned by the institution you attended and Federal Family Education Loans owned by commercial lenders. If these lenders will not provide you with any help, there may be an opportunity to consolidate these loans that are not owned by the Department of Education into a Direct Consolidation Loan.
You may want to contact your service provider to confirm the type of loan you hold. You can also login online to see if the interest and payments have been suspended. If they have not been suspended and you think they should be, you may want to reach out to your lender, as some may not be automatic.
The suspension does not include private student loans. You may want to contact your service provider to see if they are offering any relief during this time.
If your income has not been affected by the virus and you can afford to make the payments, it is a good time to make headway on your loans because your entire payment will go to the principal! If you have auto-debit payments set up, these will be stopped. You can simply make manual payments online or ask your lender to opt out of the forbearance to continue the payments.
If you cannot afford the payments, you can simply stop paying for now. In fact, you can get a refund on any payment that you make during this period of forbearance (March 13, 2020 – Sept. 30, 2020). Each month during the suspension will count as if you had made a payment. This is helpful for borrowers with loans in default or those working toward loan forgiveness through programs such as Public Service Loan Forgiveness, as it will still count for them.
Additionally, for current students, the CARES Act includes several measures to help allow you to continue your studies or not penalize you if you can’t due to the virus. If a student drops a certain number of classes or withdraws from school, many loans and Pell Grants have to be repaid or a portion repaid. This has been waived in the CARES Act. Further, if you or your parents have income loss because of COVID-19, there may be funds available to help with grants and costs that may allow you to stay in school.
If you have questions specific to your situation, contact the Experts at Henssler Financial:
- Experts Request Form
- Email: firstname.lastname@example.org
- Phone: 770-429-9166
- Join the Conversation in Our Coronavirus Facebook Group