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Student Loans During COVID-19

2020 has been quite the rollercoaster ride, to say the least. I am always looking for the silver lining during periods of turmoil. One of the most considerable benefits to come from all this pandemic madness relates to federal student loans.

1) Zero Percent Interest Period – For the time being, interest rates are zero percent on federal student loans. Initially set to expire after September 30th, 2020, President Trump later extended through December 31st, 2020, via Executive Order in early August. If you opt to make payments during this time, they will first apply to interest accrued before March 13th. After the outstanding interest is paid, then payments would go 100% to the principal balance. Assuming you can make payments during this period, you could make a serious dent in the principal amount you owe.

2) Automatic Forbearance – This forbearance automatically suspended all federal student loan payments through September 30th and was extended through December 31st by President Trump’s Executive Order. You can continue making payments on your student loans during this window if you choose. To do so, you will need to contact your loan servicer to reinstate payments.

3) Public Service Loan Forgiveness (PSLF) – The CARES Act specifically addressed PSLF for public service workers. The original forbearance period, ending September 30th, 2020, has been extended through the end of year. The “missed” payments will continue to count towards the 120 payments needed to have the loans forgiven tax-free. This is a massive benefit to those of you working towards PSLF. You are effectively skipping these payments while still receiving credit as if you had continued to make your 120 consecutive payments to qualify for the forgiveness.

If you have any questions regarding your Federal Student Loans and how this may affect you, please don’t hesitate to reach out to us.


Skyler Denny

Skyler is a CERTIFIED FINANCIAL PLANNER™ and the senior advisor for the Financial Synergies Pathway® program. Pathway® is a financial planning and investment management solution for young professionals still in accumulation mode.

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