The Department of Education has once again extended its freeze on payments and interest rates for all federal student loans through January 31, 2022.
For those who have federally held student loans, this administrative forbearance means that you are getting relief from making regular payments for the third time since the pandemic began. Since the deadline for student loan forbearance has been extended yet another time, this means that there will once again be a pause on payments and interest accrual. Thanks to the extension of the Coronavirus Aid, Relief, and Economic Security Act, known to most people as the CARES Act, which was passed in March 2020 for economic relief due to the pandemic, those with student loans are receiving additional assistance at least through next year.
The original plan was that all federally held student loans would be suspended with no interest through September 30, 2020. President Trump, while in office, signed an executive order extending the forbearance through December 31, 2020, with the Secretary of Education further extending it until January 31, 2021.
The next extension came on Joe Biden’s first day in office when he signed an executive order that directed the Education Department to extend the program once again through September 30, 2021. And the latest extension came on August 6, when the Department of Education again delayed payments and interest under the forbearance, that will supposedly end on January 31, 2022.
In order for your student loan to be included in this forbearance extension, it must be a loan that is owned by the U.S. Department of Education. Such qualified student loans include direct Loans, subsidized/unsubsidized Stafford loans, Parent and Graduate Plus loans, Federal Family Education Loans, (FFEL), Perkins loans, as well as consolidation loans.
If your loan is included in the government’s extension of federal student loans, here are some of the ways the forbearance will affect your loan.
Administrative Forbearance for Federal Student Loans Facts:
- Suspension of loan payments
- No collection of defaulted loans
- Reflects an interest rate of 0%
Each month of payment suspension under the program will be counted as if a payment was made due to the loan forgiveness program.
Not making your student loan payment during the forbearance period does not mean that the government is making each loan payment on your behalf, though. Instead, your loan balance will remain the same with no accrued interest or late fees, and you will receive no penalty for your lack of monthly payment. The unpaid balance will remain the same and is still due by you according to the original loan documents when the forbearance period ends.
There have been discussions of whether these continued forbearances may eventually mean that student loans will be canceled altogether, but it has not been verified that this will actually be approved.