Executive Action to Extend Student Loan Payment Suspension
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provided a payment suspension and interest waiver for federally-held student loans, set to expire on September 30, 2020. The CARES Act specifically directs that the months of the payment suspension shall be counted towards federal loan forgiveness for borrowers enrolled in Income-Driven Repayment Plans.
On August 8, 2020, President Trump directed the Department of Education to continue the temporary cessation of payments and the waiver of interest on student loans held by the Department of Education until December 31, 2020. The Executive Memorandum for the Secretary of Education directs the Secretary to implement “waivers of and modifications to the requirements and conditions of economic hardship deferments” pursuant to the Higher Education Act of 1965 to effectuate the continued payment suspension and interest waiver.
Notably, the Memorandum does not address whether the three months of payment suspension from October through December will be counted as progress towards forgiveness. Under the Higher Education Act, periods of Economic Hardship Deferment are counted towards long-term Income-Driven Forgiveness but are NOT counted towards the 120 payments required to earn Public Service Loan Forgiveness (unless the borrower makes payments of at least the amount required under a standard 10-year repayment term).
At the time of this writing, the Department of Education has not updated the studentaid.gov website with information regarding the implementation of the August 8, 2020 executive action.
