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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions — in 15 minutes or less.
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This week’s question is from Heather in Maryland who asks, “Can you explain the provisions in the federal legislation as they relate to student loans? Do borrowers have to take action to receive these benefits or are they automatic?”
The economic stimulus package doesn't forgive anyone's education debt, but it did put a big old pause button on most federal student loans. Borrowers don’t have to make payments until after Sept. 30, and no interest will be charged during that time on education loans held by the federal government. To see if yours qualifies, log into your account at studentaid.gov and check your loans. If the listed owner is the U.S. Department of Education, you’re covered.
The pause is automatic — you don’t need to contact your loan servicer, which is the company that takes your payments. But expect some delays since the coronavirus pandemic has shuttered some call centers and slowed the pace at which servicers can react.
If you have federal student loans that don’t qualify, such as most Perkins loans and loans made through the old Federal Family Education Loan Program, you could consolidate them at studentaid.gov and qualify for the pause that way.
If the six-month break isn’t enough, you may benefit from income-driven programs that can reduce your payments.
If you have private student loans, meanwhile, the pause doesn’t apply to you, but your lender may be able to offer you forbearance or reduced payments if you’re struggling.
Federal student loan borrowers are getting flexibility, not forgiveness. The government is pausing payments for most student loan borrowers until Sept. 30. During that break, no interest will accrue on those loans.
Automatic does not mean instantaneous. You do not need to contact your loan servicer, but it could take a while for these changes to be reflected in your account.
Reach out if you need more help. If the break in payments isn't enough or your loans aren't included, reach out to your loan servicer to discuss other hardship options.
More about how the coronavirus pandemic and student loans on NerdWallet: