BATON ROUGE, La. (BRPROUD) — The CARES Act, signed into law by President Donald Trump, has several benefits for student loan borrowers. The three major changes affect federal loan payments, interest accrual and garnishment of wages.
Under the CARES Act, federal student loan payments are suspended through Sept. 30. This means borrowers have the option to stop paying federal student loans, without penalties or fees. This option applies only to loans owned by government agencies, like Direct Loans.
Through Sept. 30, interest will not accrue on federal student loans. Throughout this time, the interest rate will be set to 0% and no new interest will accrue on a federal student loan balance. This does not apply to private student loans or FFEL Loans.
Student loan debt collection has been halted. This means that wages, tax refunds and Social Security benefits will not be garnished during this period to pay for federal student loans. This does not mean the federal government is forgetting about student loan debt in default, but rather the federal government is suspending loan debt collection during this period.
More information can be found here.