New Federal Student Loan Changes Over COVID-19
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With lectures and labs being suspended and online learning becoming the norm, physical therapy students have had to adjust to a new normal. But there is some potentially good news when it comes to students who have federal student loans.
First, on March 20, the Department of Education announced that it would provide financial relief to current students and graduates with student loan debt during the national emergency. The office of Federal Student Aid announced the following changes:
- All federal student loan interest rates will automatically be set to 0% for at least 60 days.
- Borrowers who are delinquent on payments for more than 31 days will be automatically placed in administrative forbearance (or suspension of payments without penalty) for at least 60 days.
- All borrowers can request administrative forbearance by contacting their loan service provider.
These changes are restricted to federal loans and federal loan borrowers only. How long will this last? The Department of Education has stated that it will provide this relief for at least 60 days and will extend the relief, depending on the severity of the COVID-19 national emergency.
Building upon this, on Friday, March 27, the president signed the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, that provide additional support for students and educational programs. Under the CARES Act, federal student loan borrowers will be able to defer payments, and employers can offer repayment benefits tax free. Payments on federal student loans can be deferred through September 30, with no accrual of interest during that period. Additionally, the stimulus allows employers to contribute up to $5,250 annually toward an employee's student loans without the benefit of being taxed as employee income. The employer provision applies to any employer payments made between now and January 1, 2021.
The U.S. Department of Education's Student Federal Aid office has posted additional information as well as frequently asked questions on Coronavirus and forbearance for students, borrowers, and parents at: https://studentaid.gov/announcements-events/coronavirus.
Addressing student debt burden and loan repayment challenges remains a top priority for APTA. APTA has advocated to Congress to have physical therapists participate in student loan forgiveness programs such as the National Health Service Corps, and APTA's Financial Solutions Center offers valuable tools and information to help members make the best financial decisions possible.
David Scala, Senior Congressional Affairs Specialist, APTA