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    CARES Act - Is Your Student Loan Eligible For Coverage?

    With unemployment on the rise and the economy succumbing to the COVID-19 pandemic, many Americans are worried about being able to repay their student loans on time.

    Luckily, the Federal Government launched the CARES Act, helping many borrowers find relief during these tough times.

    Still, not all student loans are covered under this act. Keep reading to understand which loans are eligible for relief and which aren’t.

    The CARES Act

    The CARES Act is a $2 trillion stimulus package launched exclusively to help student loan borrowers apply for certain temporary provisions.

    The interest has been temporarily set to 0% on all ongoing Federal student loans for the period of March 13th to September 30th, 2020. 

    Eligible borrowers can opt into multiple provisions to help ease their repayment of federal student loans.

    Student Loans Covered By The CARES Act

    Most of the provisions offered under this Act only apply to non-defaulted Federal Family Education Loans (FFEL Loans) and Direct Loans owned by the Federal Government.

    So, if you have any of these loans, you can benefit from one of the provisions listed below:

    Temporary Suspension Of Payment

    According to the Act, all monthly payments due on the aforementioned loans are temporarily suspended, effective March 13th to September 30th, 2020. 

    Zero-Interest Accrual

    The Act also clarifies that interest won’t accrue on these temporarily suspended loans during the period of administrative forbearance.

    Note that this provision only applies to suspended loans, hence only FFEL and Direct Loans owned by the Department of Education are eligible.

    In case you wish to continue making payments as usual, all of the amounts will be directly deducted from the outstanding principal amount.

    Temporary Suspension Implies Forgiveness Or Loan Rehabilitation

    If a borrower opts for payment suspension during this period, it’ll be treated as if the borrower has made a payment for any authorized loan rehabilitation or loan forgiveness program for which he/she has otherwise qualified.

    If your loan is qualified for an income-driven repayment program, these suspended payments count towards forgiveness.

    Impact On Credit History

    All suspended payments during this period will be treated as regular monthly payments and there won’t be a negative impact on your credit history.

    Suspension Of Collection

    Under this Act, all involuntary collections on defaulted FFEL and Direct Loans until September 30th, 2020 are suspended.

    This suspension covers tax offsets, federal benefit offsets, and non-judicial wage garnishment.

    Student Loans Not Covered By The CARES Act

    Not all Federal loans are eligible for this benefit. If your FFEL loan isn’t owned by the Federal Government, you’ll need to keep making payments as usual.

    Besides, any student loans from commercial or private lenders aren’t eligible for these options as well.

    Solution For Ineligible Loans

    The simplest solution is to consolidate your FFELP loan into a direct consolidation loan.

    You can do it by contacting your lender and reviewing the requirements on the Student Aid website.

    However, keep in mind that it may lead to a higher rate of interest and it takes almost 30 days to process.


    If you’re facing economic hardship and your loan is owned by the Department of Education, it’s a good idea to benefit from the CARES Act.

    You can contact the lender and see to it that auto-debits are paused, if not already done.

    In case you wish to keep making payments, it can help you to clear off the loans sooner than the term.

    Both work in your benefit; hence the choice rests on you.