There are four things to know about how administrative forbearance affects student loans through Sept. 30, 2021:
Note that the suspension does not mean that the federal government is making your student loan payments for you — you’ll just be free of making loan payments for eight months without accruing interest or incurring late fees during that period.
What Is Student Loan Administrative Forbearance?
If you have federally held student loans, you’re getting a break on making payments — again.
The pause on payments and interest accrual is an extension of the administrative forbearance that originated with the Coronavirus Aid, Relief, and Economic Security Act — aka the CARES Act — passed in March 2020 to address economic issues due to COVID-19.
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What Loans Does This Legislation Cover?
On Wednesday, Jan. 20, 2021, President Joe Biden signed an executive order in the Oval Office directing the Education Department to extend its freeze on interest rates and payments for federally held student loans through September. Evan Vucci/AP
Biden did not, despite some hopes, forgive thousands of dollars in student loans in his initial executive orders. That request will need to go through Congress and faces opposition — which means if student loan balances are wiped out permanently, it won’t be for a while.
What Does This Legislation Mean for My Student Loans?
On his first day in office, President Joe Biden signed an executive order directing the Education Department to extend its freeze on interest rates and payments for federally held student loans through Sept. 30, 2021.
- It suspends loan payments.
- It stops collections on defaulted loans.
- It sets the interest rates to 0%.
- Each month of the suspension will count as a payment for the purpose of a loan forgiveness program.
Biden directed the extension yesterday amid a flurry of executive orders he signed on his first day in office.
Then-President Donald Trump later signed an executive order to extend the administrative forbearance period until December 31, 2020, and the Secretary of Education extended those measures until Jan. 31, 2021.
Here are five ways to know if you can benefit from the forbearance period. <!–
Ready to stop worrying about money?