Student Loan Relief Under the Federal CARES Act

The federal stimulus plan provides student loan relief to many borrowers and prohibits adverse credit reporting during the coronavirus pandemic.

By , Attorney

The federal stimulus plan, called the Coronavirus Aid, Relief, and Economic Security (CARES) Act, puts most student loan payments on hold during the COVID-19 national emergency and, if your loans qualify, ensures that your credit won't take a hit as a result of the suspension.

Relief for Federal Student Loan Borrowers

The CARES Act suspends payments on all federal student loans held by the U.S. Department of Education for six months. So, if your loans are eligible, you can stop paying your student loans through September 30, 2020. This law also waives student loan interest on qualifying federal student loans through September 30, 2020.

The payment suspension and interest reduction are automatic; you don't have to request them.

What Loans Are Covered?

The CARES Act applies to Direct Loans, as well as FFEL loans, but only those FFEL loans that are owned by the U.S. Department of Education—not FFELs that are owned by other entities. Borrowers with private loans and Perkins Loans held by entities other than the Department of Education also don't get relief under the plan.

Check with your servicer or go to to find out whether the Department of Education or a different entity is the holder of your student loans.

Prohibition on Collection Actions, Wage Garnishments, and Treasury Offsets

The Act also stops collection actions, wage garnishments, and Treasury offsets for defaulted federal student loans through September 30, 2020.

Effect on Loan Forgiveness and Rehabilitation

Even though payments will be suspended for six months, under the CARES Act, those six months will still count as qualifying payments for the purposes of student loan forgiveness programs, including Public Service Loan Forgiveness. Also, borrowers in default will have their six months of suspended payments count towards the nine months needed for loan rehabilitation.

No Negative Credit Reporting During the Payment Suspension

Pursuant to the CARES Act, during the payment suspension, the loan servicer can't report the loan as delinquent to the credit reporting bureaus. The Act requires the servicer to treat suspended payments as if they were regular payments that the borrower made.

Effective date: March 27, 2020