Photo by Soham Parikh | The Wright State Guardian
Due to the coronavirus outbreak in the United States, President Donald Trump announced a freeze on student loan interest. The announcement came on March 13.
According to the Student Aid webpage, borrowers can request an administrative forbearance at this time to offer relief.
“Interest will automatically be waived by the Department of Education (ED) for all federally owned loans for at least 60 days, beginning March 13th,” said Seth Bauguess, director of communications. “For current students attending at least half time, this means that interest on any of their Federal Direct Unsubsidized or Federal Direct PLUS Loans will not accrue during this time.”
Given the national emergency, Secretary Betsy DeVos made the announcement about Trump’s decision.
All delinquent payments past 31 days are automatically suspended for the time being as well.
Additionally, all loans gaining interest that are owned by ED be waived.
According to Student Aid this includes:
- Federal Perkins Loans
- Federal Family Education Loan (FFEL) Program loans held by ED.
- Direct Loans
Student Aid is encouraging borrowers to keep in touch with the institution’s financial aid department for extenuating circumstances.
While the Student Aid page offers guidance where they can, most answers must come from the specific institution borrowers are involved with.
According to the Student Aid webpage, certain FFEL Program loans are owned by commercial lenders, and some Perkins Loans are held by the institution borrowers attended. These loans are not eligible for this benefit but can be consolidated into a Direct Consolidation Loan.
Once the waiver ends, the interest rate may be higher than what borrowers are currently paying, and any outstanding interest will capitalize, meaning that the interest is added to the principal balance.
The servicer can provide you with information about how the loan balance, interest rate, and total amount paid would change if consolidated into a Direct Consolidation Loan.
ED will not cover forbearance requests for private loans due to a lack of legal authority over them.
