Amanda H. Christensen, AFC
Update as of November 14, 2022
A federal judge in Texas ruled President Biden’s proposed student loan debt forgiveness plan illegal. This means borrowers no longer have access to the application and the forgiveness program is on hold indefinitely. While the Biden administration will appeal this decision, this process will extend the timeline and does not guarantee the decision will be overturned.
What does this mean for someone who was planning to receive student loan forgiveness? Here are some important considerations while you wait for this process to play out.
Principal and interest payments on federally-held student loans are automatically suspended through December 31, 2020.
The CARES Act suspended principal and interest payments on federally-held student loans through September 30, 2020, and an Executive Order directed the Department of Education to extend the suspension until December 31, 2020. The Department of Education extended other student loan benefits in the CARES Act until December 31, 2020.
What you need to know:
From March 13 through December 31, 2020, the interest rate is set to 0% and payments are suspended for student loans owned by the federal government. If you made a payment toward your federally-held student loans after March 13, you can request a refund from your student loan servicer.
PRO TIP: If you are financially able to make payments or continue making regular payments on your student loans, any payments you make after March 13th will be applied directly to principal. This will help you pay off your loans faster.
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