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Financial Services Law Insights and Observations

Federal student loan payments suspended, interest waived during Covid-19 national emergency

Federal Issues Student Lending Student Loan Servicer Interest Rate Forbearance Covid-19

Federal Issues

On March 20, U.S. Secretary of Education Betsy DeVos announced temporary relief for student loan borrowers in response to the Covid-19 national emergency. The borrower relief measures include:

  • Automatic 0% interest rates on all federally held student loans for at least 60 days;
  • Option to suspend payments for at least two months;
  • Administrative forbearance on any federally held loan by all federal student loan servicers at the request of the borrower, for at least 60 days, beginning on March 13;
  • Automatic payment suspension for any borrower who is “more than 31 days delinquent as of March 13, or who becomes more than 31 days delinquent”; and
  • The entire loan “payment will be applied to the principal” loan amount “once all interest accrued prior to the president's March 13 announcement is paid” for all borrowers who wish to continue making payments on their loans.

Additional information may be found at StudentAid.gov/coronavirus.